Moving markets: Five things shaping the FTSE 100 today
Moving Markets Today: Asian Stocks Decline, Greenback Strengthens; Oil Prices Surge Amid Escalating Middle East Tensions, Focus on UK Labor Market Data
Asian markets experienced a dip to a one-month low, accompanied by a drop in U.S. stock futures and a rise in the dollar on Tuesday. This shift was driven by a cautious tone from central bankers, reducing expectations for interest rate cuts. The market awaited comments from the influential Fed figure, Christopher Waller. Against the backdrop of an escalating crisis in the Middle East, oil prices saw an uptick as tankers altered their routes. Meanwhile, Donald Trump’s win in the Iowa caucus marked an initial step toward a potential rematch with Joe Biden. Investor focus turned to the UK labour market data and Germany’s inflation. Investors remained cautious, keeping an eye on key indicators, including Chinese GDP data, and December inflation figures for the UK and Eurozone. Here are five key takeaways for your day.
Trump Triumphs in Iowa Caucus; Ramaswamy Exits 2024 Presidential Race
Donald Trump won the first 2024 Republican presidential contest in Iowa on Monday, solidifying his influence within the party as he seeks a third nomination and a potential rematch with Democratic President Joe Biden. Ron DeSantis and Nikki Haley are in a close competition for the second position in the race. After finishing fourth in the Iowa caucuses, Vivek Ramaswamy decided to suspend his presidential campaign, according to Bloomberg.
Japan’s Dec Wholesale Inflation Remains Unchanged; China’s GDP Growth to Slow in 2024-2025
Japan’s wholesale inflation in December remained flat compared to the same month a year earlier, marking the 12th consecutive month of deceleration. The data suggests a moderation in consumer inflation in the coming months, lessening the pressure on the Bank of Japan (BOJ) to swiftly reduce its extensive monetary stimulus.
China’s economic growth is predicted to slow to 4.6% in 2024 and further drop to 4.5% in 2025, according to a Reuters poll of economists. The poll indicates a likely 5.3% year-on-year GDP growth in Q4 2023, up from the third quarter’s 4.9%. However, the forecast suggests a 1.0% growth in Q4 on a quarterly basis, down from the 1.3% growth in July-September. This puts pressure on policymakers to implement more stimulus measures due to deflationary pressures and a significant property downturn.
Oil Prices Rise Amid Growing Middle East Crisis
Oil prices edged up on Tuesday amid escalating tensions in the Middle East. Brent crude futures rose by 12 cents to $78.27 per barrel, recovering from a 14-cent dip on Monday. Meanwhile, U.S. West Texas Intermediate crude declined by 17 cents, standing at $72.52 per barrel after a U.S. public holiday on Monday.
Ship tracking data revealed tankers changing routes away from the Red Sea due to attacks by Yemen’s Houthi movement. Iran’s Revolutionary Guards launched ballistic missiles at targets in Syria and northern Iraq, including an alleged Israeli intelligence centre. Simultaneously, Iran-backed Houthis attacked a U.S.-owned cargo ship on Monday, the first direct assault on a commercial vessel since recent strikes by American and British forces against Yemeni rebels last week.
What’s Coming Up
An eventful week ahead with key data on Chinese Q4 GDP growth, UK inflation, and U.S. retail sales scheduled for Wednesday. Investors are keenly awaiting statements from central bank figures, including the Federal Reserve’s Christopher Waller, who influenced a late November market surge. Waller is set to speak later on Tuesday.
Asian Stocks Drop, U.S. Dollar Rises on Rate Cut Speculation
Asia-Pacific stocks, excluding Japan, fell by 1%, hitting their lowest point since mid-December. Japan’s Nikkei 225 looked poised to end a six-session winning streak with a 0.7% dip from Monday’s 34-year high. Despite U.S. markets being closed for a holiday on Monday, S&P 500 futures showed a 0.4% decline in Asian trade. Australia’s S&P/ASX 200 index slid to a one-month low on Tuesday, influenced by a drop in mining stocks following a Rio Tinto operations report. The overall index fell by 0.9%, with Rio Tinto and BHP Group declining by 1.7% and 1.5%, respectively. Arcadium Lithium and South32 also posted losses of 3.6% and 3.9%. In thinner Asian trading, U.S. Treasuries declined, causing the yield on the 10-year note to rise by 0.05 percentage points to 4%. The dollar increased by 0.234% to 102.88, maintaining a 0.2% gain overnight. Gold held steady at $2,052 per ounce, retaining last week’s gains, while Bitcoin remained at $42,600.