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FTSE 100 today: London markets brace for cautious start amid weak global cues, BoE policy decision holds key

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Moving Markets Today: Asian Markets Mirror Wall Street’s Decline, Oil Prices Climb Amid Middle East Tensions, Bank of England Decision Awaited, Spotlight on Apple, Amazon, and Meta Earnings 

U.S. stocks saw a significant decline as the Federal Reserve opted to keep interest rates unchanged, dispelling hopes of an immediate rate cut by March. Meanwhile, oil prices rose slightly due to escalating tensions in the Middle East. Investors are closely monitoring the Bank of England’s first monetary policy meeting of 2024, expecting the maintenance of rates at 5.25% at 1200 GMT. Later in the day, attention will shift to the market’s response to earnings reports from tech giants Apple, Amazon, and Meta. Here are five key takeaways for your day. 

China’s Manufacturing Growth Driven by Export Orders: Caixin PMI 

In January, China’s private manufacturing sector expanded for the third month in a row, as per the Caixin PMI, while the official PMI indicated a contraction. Caixin’s PMI remained steady at 50.8, meeting expectations, while the official PMI for January was 49.2. A reading below 50 suggests a decrease from the previous month. Caixin’s PMI emphasizes small and medium-sized enterprises more than the official index. 

UK Construction Sector Optimism Surges on Rate Cut Prospects: RICS 

In late 2023, confidence in Britain’s construction sector rose slightly, driven by expectations of interest rate cuts. A survey by the Royal Institution of Chartered Surveyors (RICS) indicated a more positive outlook for the coming year, with workloads increasing from 6% to 12%, Reuters reported. The survey found that 8% of respondents reported a decline in activity in the three months ending in December, an improvement from the 10% reported in the previous three months. 

Oil Prices Inches Up Amid Rising Middle East Tensions and U.S. Fed Rate Signals 

At the start of trading on Thursday, oil prices saw an uptick, driven by growing tensions in the Middle East, signals from the U.S. Federal Reserve hinting at potential interest rate cuts, and China’s introduction of fresh measures to bolster its struggling property market. Brent crude futures rose by 46 cents, or 0.6%, reaching $81.03 per barrel, while U.S. West Texas Intermediate crude futures increased by 47 cents, or 0.6%, hitting $76.33 per barrel. This rise follows a decline of over $2 per barrel in the previous session. 

Reports emerged that the U.S. targeted multiple unmanned drones in Western Yemen, which were in the process of being readied for launch. This action occurred just a day after a deadly drone strike on a U.S. base in Jordan. The strike underscores the ongoing tensions in the Middle East, disrupting shipping routes in the Red Sea and raising concerns about delayed oil deliveries in Europe and Asia. Concerns about potential disruptions in oil supply were a significant factor supporting prices in January, marking the end of three consecutive months of declines. 

What’s Coming Up 

The Bank of England is getting ready to unveil its decision on monetary policy later today. It’s widely expected that they will choose to keep the key interest rate unchanged at 5.25% for the fourth month in a row. The decision is likely to be backed by a majority of 7-2 among policymakers. Economists speculate that while the Bank of England may acknowledge the swift progress in reducing inflation this week, they are unlikely to lower interest rates just yet. Governor Andrew Bailey will host a press conference at 1230 GMT. 

Furthermore, there’s a buzz around the corner for eagerly awaited earnings reports from major tech and tech-related companies. Apple Inc, Amazon.com, and Meta Platforms Inc are scheduled to report on Thursday. Notable reports also include General Motors Inc on Tuesday, Boeing Co on Thursday, and Exxon Mobil Corp and Chevron Corp on Friday, wrapping up the week. 

Asian Equities Track Wall Street’s Slide; U.S. Dollar Near 7-Week High 

U.S. stock markets declined, with the Dow Jones falling by 0.82% to 38,150.30, the S&P 500 dropping 1.61% to 4,845.65, and the Nasdaq Composite slipping 2.23% to 15,164.01. Alphabet Inc’s shares plummeted 7.5% due to disappointing ad sales, while Microsoft Corp faced increased costs for developing AI features, though its quarterly results exceeded expectations. In Asia, Japan’s Nikkei 225 dipped 0.5%, South Korea rebounded by 0.7%, and Chinese blue chips CSI300 fell 0.4%. U.S. Treasuries rallied, with 10-year yields dropping 12 basis points to 3.91%, and the U.S. dollar index slipped 0.07% to 103.54. Gold prices ended slightly higher at $2,040 per ounce amidst fluctuations following the Fed’s announcement.

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