Moving markets today: Wall Street dive echoed in Asian markets; oil prices rise amid middle east worries, gold prices dips; All eyes on US jobs report and UK housing prices
Wall Street stocks closed sharply lower on Thursday, as investors digested the latest round of remarks from Federal Reserve officials and the price of oil breached $90 for the first time since October. Asia stocks stumble on risk-off mood. A holiday in China also made for thinner trading conditions. Geopolitical tensions in the Middle East also have traders on guard. Oil prices bound for second weekly gain on geopolitical tension. Samsung set to report 10-fold jump in profits after memory prices recover. BOJ’s Ueda hints at potential rate hike amid yen’s impact on prices. Investors’ attention at the end of the week will be squarely on the US non-farm payrolls report for March. Here are five key takeaways for your day.
BOJ’s Ueda hints at potential rate hike amid yen’s impact on prices
Bank of Japan Governor Kazuo Ueda said to the Asahi newspaper that the central bank might take action through monetary policy if the yen’s decline significantly affects inflation and wages in ways that cannot be ignored. Ueda also added that inflation is expected to rise “from summer towards autumn” due to substantial pay increases in this year’s annual wage negotiations, possibly leading to another interest rate hike later in the year.
Ueda stated, “We ended our extensive stimulus program because we saw the possibility of inflation approaching 2 per cent. If we become more confident in this outlook, it could influence our decision to adjust interest rates.” – Reuters reported.
Japanese Finance Minister Shunichi Suzuki reaffirmed the government’s stance against significant fluctuations in exchange rates, particularly emphasizing concerns about sharp declines in the value of the yen. He reiterated the government’s determination to take appropriate actions to address such instances.
Samsung eyes 10-fold profit jump as memory prices recover
Samsung Electronics expects a tenfold increase in first-quarter operating profit due to a strong recovery in memory chip prices. Preliminary data suggests operating profit could reach Won6.6 trillion ($4.9 billion), surpassing analysts’ expectations. Sales rose 11.4 per cent to Won71 trillion.
This marks Samsung’s highest earnings since Q3 2022, with the chip division likely returning to profitability after five quarters of losses. However, Samsung shares dipped 1.3 per cent on Friday morning despite a 30 per cent increase over the past year, the FT reported.
Oil prices on track for second weekly upsurge amidst geopolitical turmoil and supply issues
Oil prices continued their upward trajectory on Friday, marking a second consecutive week of gains. The boost came amidst ongoing geopolitical tensions in Europe and the Middle East, coupled with concerns about a tightening oil supply and optimistic outlooks for global fuel demand growth as economies show signs of improvement, Reuters reported.
Brent crude edged up by 0.3 per cent to hit $90.94 per barrel, while US West Texas Intermediate crude rose to $86.72 per barrel, a 0.15 per cent increase. Both benchmarks reached their highest levels since October during Thursday’s trading session.
Moreover, ongoing geopolitical tensions in the Middle East are keeping traders on edge. US President Joe Biden’s remarks on Thursday added to the cautious atmosphere, as he indicated that support for Israel’s actions in Gaza might be contingent upon concrete efforts to protect aid workers and civilians.
Market direction: What to watch today
Friday’s US employment data holds the potential to provide deeper insights into both the labour market and inflation.
Experts predict a decrease in nonfarm payrolls for March, dropping to 200,000 from the previous month’s figure of 275,000, while the unemployment rate is foreseen to remain stable at 3.9 per cent. On the other hand, there’s an anticipation of an uptick in average hourly earnings growth, expected to rise from 0.1 per cent in February to 0.3 per cent this time around.
Presently, indications from money markets suggest a nearly 60 per cent chance of a minimum 25 basis-point interest rate cut in June, as per the CME Group’s FedWatch tool.
Meanwhile, in the UK, Halifax is gearing up to unveil its house price index for March, followed by the release of S&P Global’s UK construction sector Purchasing Managers’ Index for the same month.
In the eurozone, all eyes will be on the German factory orders figures, along with the scheduled release of eurozone retail sales data for the same period.
Asian stocks slide amid growing risk-off sentiment
Overnight, the Dow Jones Industrial Average dropped by 1.35 per cent, closing at 38,596.98 points, while the S&P 500 saw a decrease of 1.23 per cent, settling at 5,147.21 points. Similarly, the Nasdaq Composite declined by 1.4 per cent, reaching 16,049.08 points.
Within the S&P 500, various sectors experienced a general downturn, notably the technology sector with a significant decrease of 1.7 per cent, although defense-related companies like Lockheed Martin recorded gains.
In Asian markets, a retreat was evident on Friday, with Tokyo’s Nikkei 225 plummeting by over 2 per cent, influenced in part by a stronger yen resulting from potential rate hikes and increased verbal intervention from Japanese authorities. Hong Kong’s Hang Seng Index also dipped by 1.33 per cent.
Despite hovering around the 152 range, the yen reached a two-week high against the US dollar due to safe-haven demand and cautious statements from Japanese authorities, strengthening the currency. Meanwhile, the dollar index, gauging the dollar against major currencies, rose slightly by 0.1 per cent to 104.33.
Gold retreated from its record peak, experiencing a decrease of 0.72 per cent to $2,273.14 per ounce.