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Moving markets: Five things shaping the FTSE 100 today

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Moving markets today: Asian markets rise with Nikkei, bitcoin hits two-year high, oil prices up – eyes on UK budget, China’s annual Chinese Communist Party meetings 

Asian stock markets gained ground, driven by the Nikkei hitting another record high, while investors anticipated a busy week ahead. They’re keeping a close eye on central bank events and key data releases that will shape expectations about the timing of potential interest rate changes. Oil prices rose following OPEC+ nations’ decision to extend their oil production cuts into the second quarter. Bitcoin also surged to its highest level in over two years, buoyed by significant investments in cryptocurrency exchange-traded funds. Throughout this week, various significant events are set to unfold: Chancellor Jeremy Hunt will reveal the Spring Budget, Beijing will host the annual Two Sessions meeting where top Communist party cadres will convene to determine the country’s annual growth target, central bankers will deliver speeches, and UK insurers are slated to disclose their earnings reports. Here are five key takeaways for your day. 

UK’s Hunt tempers expectations of significant tax cuts in pre-election budget 

UK’s finance minister, Jeremy Hunt, aimed to temper expectations surrounding substantial pre-election tax cuts in the upcoming budget, citing a deterioration in the economic outlook. Nonetheless, he hinted at the potential for offering support to voters in some form. “We don’t have as much of a positive outlook as we had at the end of the Autumn Statement,” he said in an interview, referring to last November’s fiscal update, Reuters reported. “So it’s going to be a budget where we stress the progress we’ve made on bringing down inflation, but also the importance of being responsible with the country’s finances.” 

Japan government ponders ending deflation amidst rising prices 

Japanese government is mulling over the possibility of declaring an end to deflation amidst the backdrop of increasing prices, as per reports from the Kyodo news agency. The decision hinges on the outcome of the upcoming annual labour-management wage negotiations set for March 13, which are anticipated to mitigate the impact of rising prices, along with an assessment of future price trends. Should this materialize, Japan would break away from the deflationary trend that has hindered economic progress for more than two decades. 

Oil prices jump as OPEC+ extends output reductions 

Oil prices saw an uptick following the decision by OPEC+ nations to extend their voluntary oil production cuts of 2.2 million barrels per day into the second quarter, a move that was largely anticipated by the market. Brent futures edged up by 0.3% to reach $83.83 per barrel, while U.S. West Texas Intermediate (WTI) also increased by 0.3% to $80.17 per barrel. 

This extension of the output cuts by OPEC+ members, notably led by Saudi Arabia and Russia, provides additional support to the oil market, especially amid concerns about global economic growth and rising oil production from non-member countries. Russia announced that it would reduce its oil output and exports by an additional 471,000 barrels per day in the second quarter, in collaboration with select OPEC+ countries, as confirmed by Deputy Prime Minister Alexander Novak on Sunday. 

What’s coming up 

This Wednesday, Chancellor Jeremy Hunt will present the Spring Budget to Parliament at 12:30pm London time, likely the last major economic update before the upcoming general election. In China, the parliament is gearing up for its annual meeting starting Tuesday, where it’s anticipated to introduce moderate stimulus measures aimed at stabilizing economic growth.

President Xi Jinping faces pressure to revive the economy. Central bankers will give speeches this week on interest rate adjustments, with Jay Powell and Christine Lagarde among them. In the UK, insurance companies like Aviva, Legal & General, Hiscox, and Royal London will report their financial figures following a quiet start to the earnings week. 

Nikkei sets tone for Asia’s market rally; Bitcoin Surges Past $64,000 Mark 

Japan’s Nikkei N225 index soared by 0.8%, crossing the historic 40,000 milestone for the very first time, driven by a continuous five-week uptrend. Meanwhile, S&P 500 and Nasdaq futures remained relatively stable, having reached record highs on Friday due to strong earnings reports and growing excitement surrounding artificial intelligence. The broader Topix index in Japan also saw a modest increase of 0.3%. South Korea’s Kospi index experienced substantial gains following an extended weekend break, rising by 1.3% during early trading hours.  

In the currency market, the dollar index, which measures the dollar against six major currencies including the euro and yen, dipped slightly by 0.07% to 103.79 in early Asian trading, moving closer to the lower range observed over the past month, between 103.43 and 104.97. Surprising data releases from the U.S. contributed to gold prices reaching a two-month peak, stabilizing at $2,083 per ounce. Bitcoin experienced a 1.7% increase from Sunday’s levels, trading at $63,650, briefly touching $64,284.75, the highest since November 2021, the same month it recorded its all-time high of $68,999.99.

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