Moving markets today: Asia follows Wall Street surge, Chinese stocks up on short-selling curbs; focus on UK GDP, US CPI, and Jet2 2024 results
On Wednesday, both the Nasdaq and S&P 500 achieved record-high closes, driven by strong performances from Nvidia and other major Wall Street players ahead of upcoming inflation data and quarterly earnings announcements. Asian markets followed suit, buoyed by a surge in global tech stocks that lifted US and global shares to new highs. Oil prices saw a slight increase on Thursday due to reduced crude stocks from increased US refinery activity and eased gasoline inventories, indicating robust demand. Gold prices strengthened for the third consecutive day as investors awaited US inflation data for insights into the Federal Reserve’s interest rate policies. Federal Reserve Chair Powell reiterated that rate cuts will be implemented based on economic conditions, unaffected by political considerations. Chinese stocks rose on the first day of new restrictions on short selling. Before markets opened, the focus was on UK GDP data. US inflation reports this week include the Consumer Price Index on Thursday and the Producer Price Index on Friday. The start of the second-quarter earnings season, beginning with major banks’ reports on Friday, will assess whether highly valued mega-cap companies can justify their high stock prices and sustain recent strong performance. The FTSE 100 closed higher on Wednesday, with futures suggesting a positive start for Thursday’s trading session.
Here are five key takeaways for your day.
Powell said Fed will cut rates when ready
Federal Reserve Chair Jerome Powell stated Wednesday that the central bank will base interest rate decisions on economic conditions rather than political timing, rebuffing suggestions of a September rate cut ahead of the fall presidential election.
“Our undertaking is to make decisions when and as they need to be made, based on the data, the incoming data, the evolving outlook and the balance of risks, and not in consideration of other factors, and that would include political factors,” Powell said in a hearing before the House Financial Services Committee, Reuters reported.
“We have a long history of doing that, including during election years…Anything we do will be very well grounded. It’s just not appropriate for us to get into the business of thinking about election cycles at all, one way or the other,” Powell added.
Chinese stocks rise as new short-selling rules
Chinese stocks surged as regulators tightened rules on short selling. The China Securities Regulatory Commission approved the suspension of securities lending by China Securities Finance Corporation, the leading provider of short trade facilitation, effective immediately, the FT reported.
The CSRC also increased margin requirements for short selling and introduced new regulations on quantitative trading ahead of next week’s third plenum meeting.
UK housing market optimism boosted after election: RICS
The latest RICS survey indicates that the UK housing market remains subdued, but there is optimism for increased sales following the general election and potential drops in mortgage rates.
A net balance of +20 suggests a rebound in sales over the next three months, the highest since January 2022, reflecting confidence in the Labour government’s plan to deliver 1.5 million homes in five years.
A net balance of +54 indicates rising prices over the next year, posing a challenge for increasing housing supply.
In the rental market, tenant demand rose in June (+28), but new rental listings declined (-11). A net balance of +38 suggests rental prices will rise in the next three months.
What’s on the radar
Today’s main event will be the monthly update on UK GDP before the London market opens.
We’ll also get crucial inflation data, with the US consumer price index coming out on Thursday and the producer price index on Friday.
Additionally, we’ll see June’s German consumer price figures before the London market opens.
On the business side, Jet2 will release its fiscal 2024 results.
Meanwhile, corporate news will be busy as Wall Street kicks off the earnings season, starting with reports from Citigroup, JP Morgan, and Wells Fargo on Friday.
Asian stocks surge in sync with US market rally
The S&P 500 climbed by 1.02 per cent, closing at 5,633.91 points, while the Nasdaq Composite rose by 1.18 per cent to 18,647.45 points.
The Dow Jones Industrial Average gained 1.09 per cent, ending at 39,721.36 points, and the small-cap Russell 2000 increased by 1.1 per cent.
Micron Technology, Nvidia, and Advanced Micro Devices saw significant gains. Apple reached a new high, raising its market value to approximately $3.6 trillion.
S&P 500 futures remained stable, but Nasdaq futures dipped 0.11 per cent during the Asian session following Wall Street’s record gains.
In Europe, EURO STOXX 50 futures fell by 0.10 per cent. The FTSE 100 ended 0.66 per cent higher on Wednesday, with futures suggesting a positive Thursday session, rising 0.19 per cent to 8,233.0 points.
In Asia-Pacific, Japan’s Nikkei 225 rose 1 per cent to a record 42,426 points. Taiwan’s TWII reached a new peak, and Australia’s ASX 200 was near its all-time high.
Hong Kong’s Hang Seng increased by 1 per cent, and China’s blue-chip CSI300 rose by 0.4 per cent, staying close to its recent low from Tuesday.
In commodities, oil prices edged up on strong US gasoline demand. Brent futures rose by 0.4 per cent to $85.43 a barrel, while US crude increased by 0.5 per cent to $82.47 a barrel.
Gold inched up by 0.2 per cent to $2,373 an ounce, and bitcoin stabilized around $58,900 after last week’s selloff.