Moving Markets Today: Asian Markets Track Wall Street Gains, Oil Prices Surge; Attention on Fedspeak and UK House Prices
London markets are anticipated to open on a positive note, seeking to continue the upward trend observed during the previous session. This follows the lead of Asian markets, which experienced gains driven by China’s initiatives to bolster its market stability. The S&P 500 closed slightly higher as investors carefully reviewed earnings reports from prominent U.S. companies and considered statements from Federal Reserve policymakers for clues on potential interest rate adjustments. China and Hong Kong equities experienced gains amid renewed optimism regarding government support measures. Oil prices saw a slight increase due to revised estimates suggesting smaller growth in U.S. output. The spotlight in the middle of the week will be on speeches by three top Federal Reserve officials, while UK house price data for January is set to be released by mortgage lender Halifax. Here are five key takeaways for your day.
UK Living Standards Expected to Gradually Improve: NIESR
It’s anticipated that British living standards will begin to rise again this year, but it’s projected to be 2027 before poorer households recover their pre-pandemic spending power. This places an imperative on the next government to bolster the country’s slow economic growth, as reported by Reuters. The National Institute of Economic and Social Research (NIESR) stated that while overall living standards are expected to grow by 1.9% in the 2024/25 financial year starting in April, households in the bottom half of the income range will still be between 7 and 20% worse off compared to the period immediately before the COVID-19 pandemic.
Fed’s Mester Says Hot Labor Market Won’t Thwart Interest Rate Cut Plans
Loretta Mester, President of the Cleveland Federal Reserve and a voting member on interest rates, has pointed out that while the January jobs report showed remarkable resilience, other indicators suggest a slowing down, and the hot labour market will not derail plans for interest rate cuts. Mester expressed her belief that the Fed would slowly lower the federal funds target rate from its 23-year high of 5.25% to 5.5% over the course of 2024. According to the FT, “If the economy evolves as expected, I think we will gain [the confidence to cut] later this year, and then we can begin moving rates down,” she added.
Oil Prices Tick Up as US Output Growth Forecasts Trimmed
Oil prices rose slightly on Wednesday due to expectations of stable U.S. oil production until 2025, easing concerns of oversupply. Brent crude futures increased by 0.5% to $78.97 per barrel, while U.S. West Texas Intermediate crude climbed 0.6% to $73.72. The U.S. Energy Information Administration (EIA) forecasts that U.S. domestic production won’t surpass its December 2023 peak until February 2025. The EIA also revised down its 2024 growth projection to 170,000 barrels per day, sharply lower than last year’s increase.
What’s Coming Up
In the upcoming week, significant attention will be on speeches delivered by three influential members of the U.S. Federal Reserve. The lineup includes Adrianna Kugler, a Fed board member, kicking off at 1600 GMT, followed by Thomas Barkin, President of the Richmond Fed, at 1730 GMT, and Michelle Bowman, also a member of the Fed board, speaking at 1900 GMT. In the U.S., focus remains on trade data and the annual review of the Consumer Price Index (CPI) inflation rate. China, meanwhile, will closely monitor its own CPI, Producer Price Index (PPI) inflation, and credit aggregates.
On the corporate front, all eyes are on the earnings reports, particularly in the U.S. market. Major media and technology firms like Fox, News Corp, Walt Disney, Thomson Reuters, The New York Times Company, Alibaba, Arm, Spotify, and Uber are slated to reveal their financial results, drawing significant attention from investors and analysts alike.
U.S. Stocks Rise as Big Tech Sell-Off Eases; Asian Equities Surge on Government Support
U.S. stocks end on a positive note as the sell-off in major technology companies subsides. The Dow Jones Industrial Average rose by 0.37% to close at 38,521.36, while the S&P 500 and Nasdaq Composite also saw slight gains. In Asia, Hong Kong’s Hang Seng index surged by 1.3%, and China’s CSI 300 by 0.7% during early trading. The CSI 1000 index rose by 4%, and the Hang Seng Tech index increased by 2.2%. Japan’s Topix and South Korea’s Kospi advanced by 0.7% and 1.6%, respectively, while Japan’s Nikkei 225 experienced a minor 0.1% dip. Treasury bond yields declined to 4.09%, and the U.S. dollar remained stable at 104.14. Gold prices stabilized at $2,035 per ounce, while Bitcoin traded lower at $43,032.