Moving Markets Today: Asian Stocks Firm Post Wall Street’s Record Highs, Oil Prices Surge Amid Middle East Tensions, Attention Shifts to Fed, BOE, and Q4 Tech Earnings
U.S. stocks rose as investors braced for a busy week ahead, including major earnings reports, key economic data, and the Federal Reserve’s policy meeting. Asian markets had mixed performance on Monday: Hong Kong gained, while mainland China fell. UK shop price inflation hit a nearly two-year low, while oil prices edged up due to mounting Middle East concerns. Investors await interest rate decisions from the Federal Reserve and the Bank of England. The tech sector gears up for pivotal earnings releases from FAAMG companies—Apple, Alphabet, Amazon, Microsoft, and Meta—expected to shape market trends and industry performance. Here are five key takeaways for your day.
UK Shop Prices See Slowest Increase Since May 2022: BRC Report
The British Retail Consortium (BRC) reported that UK shop prices rose at their slowest annual rate since May 2022 this month, Reuters reported. This indicates easing inflation pressures ahead of the Bank of England (BoE) policy decision. Shop price inflation dropped to 2.9% in January from 4.3% in December, driven by heavier discounting during January sales compared to last year. Non-food prices rose by 1.3%, the lowest since February 2022, while food prices increased by 6.1% year-on-year, the smallest rise since June 2022, affected by lower tea and milk prices partially offset by higher alcohol duties.
BlackRock Turns Bullish on US Stocks, Foreseeing Soft Landing
BlackRock has upgraded US stocks from neutral to overweight, anticipating a smooth landing for the US economy, the Financial Times reported. They cite decreasing inflation and expected rate cuts by the Federal Reserve as key factors. BlackRock Investment Institute, the research arm of the world’s largest asset manager, made the announcement on Monday. Previously neutral on US equities, BlackRock favoured stocks benefiting from artificial intelligence. They now believe the AI-driven rally will extend beyond technology stocks if inflation and rates decline.
Oil Prices Inch Up Amid Heightened Middle East Tensions
Oil prices surged in early trading on Tuesday, propelled by escalating geopolitical tensions in the Middle East, which heightened concerns about potential disruptions to the oil supply chain. Brent crude futures saw a gain of 25 cents, representing a 0.3% increase, reaching $82.65 per barrel. Similarly, U.S. West Texas Intermediate crude experienced a rise of 31 cents, or 0.4%, climbing to $77.09 per barrel.
U.S. Defence Secretary Lloyd Austin affirmed that the United States is committed to safeguarding its troops, promising to take “all necessary actions” following a drone attack in Jordan orchestrated by Iran-backed militants. Despite the incident, President Joe Biden’s administration reiterated its stance of not seeking a war with Iran.
Focus This Week: Fed, BOE Meetings and FAAMG Earnings in the Limelight
The Federal Open Markets Committee is getting together for a two-day meeting starting on Tuesday to discuss monetary policy. It’s widely expected that they’ll keep the key interest rate, known as the Fed funds target rate, steady between 5.25% and 5.50%. Meanwhile, economists think the Bank of England will recognize the quick progress in reducing inflation this week, but they’re not likely to lower interest rates just yet. The Bank’s Monetary Policy Committee is expected to keep rates at 5.25% for the fourth month in a row at its first meeting of 2024. This week’s economic reports cover a range of topics including the labour market, with data on job openings, employment costs, productivity, and layoffs, leading up to the January employment report on Friday. There are also reports on home prices, consumer confidence, purchasing manager activity, construction spending, and factory orders.
In addition, there’s a lineup of earnings reports from big tech and tech-related companies. Alphabet Inc and Microsoft Corp are reporting on Tuesday, Qualcomm Inc on Wednesday, and Apple Inc, Amazon.com, and Meta Platforms Inc on Thursday. Other notable reports include General Motors Inc on Tuesday, Boeing Co on Thursday, and Exxon Mobil Corp and Chevron Corp on Friday, wrapping up the week.
Asian Stocks Firm; Dollar Trade in Tight Ranges
The Dow Jones Industrial Average climbed by 0.59% to close at 38,333.45, while the S&P 500 rose by 0.76% to 4,927.93, and the Nasdaq Composite increased by 1.12% to 15,628.04. Tesla Inc surged by 4.2% after revealing its capital expenditure plans. However, iRobot faced an 8.8% decline as its merger plans with Amazon were cancelled due to opposition from EU antitrust regulators. Meta Platforms experienced a 1.7% rise after brokerage firm Jefferies raised its target price on the stock to $455 from $425. In Asian markets, China’s CSI 300 index dropped by 0.9%, while Hong Kong’s Hang Seng Index gained 0.8%, largely led by consumer and property stocks. South Korea’s KOSPI gained 0.90%, and Australia’s S&P/ASX 200 rose by 0.61%. Japan’s Nikkei 225 also saw a 0.8% increase, continuing its positive momentum into the year. The 10-year yield benchmark decreased by 9.4 basis points to 4.066%, and the 30-year Treasury bond yield dropped by 8 basis points to 4.310%. The U.S. dollar index experienced a slight decline of 0.15% to 103.45 at the time of reporting. In the cryptocurrency market, bitcoin rose by 0.22% to $43,275.63.
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