Moving markets today: Asian markets follow Wall Street higher, gold hits record high, New Zealand in recession; All eyes on Bank of England policy decision
Major stock indexes in the US closed higher as Federal Reserve officials maintained their plans to cut interest rates by 0.75 percentage points throughout the year. This decision buoyed investor sentiment, leading to a positive trend in Asian stock markets as well. Gold prices soared to a record high, surpassing $2,200 per troy ounce for the first time. Micron’s shares saw a remarkable surge of over 12 per cent. Meanwhile, a deputy governor of China’s central bank noted that there is still room for reducing the Reserve Requirement Ratio (RRR). Brazil’s central bank also made headlines by reducing its benchmark interest rate by 50 basis points to 10.75 per cent. In economic news, New Zealand officially entered a technical recession after experiencing a 0.1 per cent contraction in GDP during the fourth quarter. Looking ahead, investors are eagerly awaiting the Bank of England’s interest rate decision on Thursday, which is expected to be a focal point for market activity. Here are five key takeaways for your day.
China’s central bank deputy governor said RRR cut still on table
At a Beijing press conference, a deputy governor of China’s central bank stated on Thursday that there’s room to reduce banks’ reserve requirement ratio (RRR) and stressed that China’s monetary policy is flexible. Xuan Changneng, speaking to reporters, also emphasized the People’s Bank of China’s commitment to promoting effective investment, addressing excess capacity, and stabilizing the yuan’s value, Reuters reported.
New Zealand’s economy enters technical recession
New Zealand entered a technical recession as its economy contracted slightly in the fourth quarter. Official data showed GDP fell by 0.1 per cent in December, following a 0.3 per cent decline in the previous quarter. The downturn was driven by weaker retail and wholesale trade, along with softness in manufacturing.
Rise and shine: overnight market developments while you slept
Micron’s stocks surged by over 12 per cent on Wednesday after the US chipmaker reported turning a profit for the first time since 2022. They also provided an optimistic forecast for the current quarter. Micron projected revenue of $6.6 billion for the quarter, surpassing analysts’ expectations by about $600 million, the FT reported.
Meanwhile, social media giant Reddit set the price of its shares at $34 each ahead of its anticipated debut on the New York Stock Exchange on Thursday. This pricing, at the upper end of previous guidance, gave Reddit a fully diluted valuation of $6.4 billion. Despite hitting the top of the suggested range of $31 to $34, this valuation fell short of the $10 billion mark reached during its last private fundraising round in 2021, the FT reported.
In healthcare, US-listed shares of BioNTech witnessed a 4.4 per cent decline after reporting a significant drop in revenue and earnings for 2023 due to a shift in focus towards cancer drug development. Similarly, shares of COVID-19 vaccine makers Moderna and Novavax also saw declines, with Moderna falling by 1.9 per cent and Novavax by 2.2 per cent.
On the other hand, Brazil’s central bank opted to reduce its benchmark interest rate by 50 basis points to 10.75 per cent during its sixth consecutive policy meeting on Wednesday. The bank hinted at a possible change in the current easing cycle following its next decision in May.
Bank of England under the spotlight as central bank marathon continues
The Bank of England is likely to remain cautious, refraining from immediate interest rate cuts. They’ll wait for clearer signs that the country’s high inflation is easing. The Bank is expected to keep its Bank Rate at 5.25 per cent, the highest since 2008, during its policy announcement at 1200 GMT on Thursday. Investors will also watch closely for any hints of discussions within the Monetary Policy Committee about potential rate cuts.
Alongside this, S&P consultancy will release results from its manufacturing and services purchasing managers’ surveys for March in the UK, euro area, and US. Additionally, the United States will see the release of various economic reports, including the Philly Fed’s regional factory index for March, as well as data on weekly jobless claims and existing home sales.
Moreover, central banks in Norway and Switzerland are expected to announce their latest rate decisions, with rates likely to remain unchanged at 4.50 per cent and 1.75 per cent, respectively.
Asia stocks mirror Wall Street’s upward trend
The Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite all saw gains, with increases of 1.03 per cent, 0.89 per cent, and 1.25 per cent respectively. Apart from healthcare and utilities, which are considered safer investments, most sectors experienced growth, with financials and consumer cyclicals leading the way. Around seventy-four percent of stocks rose on this particular day.
In Asia, stock markets reacted positively to the Federal Reserve’s decision to maintain its rate cut forecast. Japan’s Nikkei N225 hit a new high above 40,670, rising by 1.7 per cent during early trading. Hong Kong’s Hang Seng index led gains in the region, climbing by 2.3 per cent initially. China’s Shanghai index CSI 300 increased by 0.3 per cent, while South Korea’s Kospi surged by 2 per cent.
The price of gold saw a slight dip from its earlier spike but remained at $2,200 per ounce, marking a 7 per cent increase for the year. Brent crude futures remained steady at $86.48 per barrel, and Bitcoin experienced a 1 per cent increase, reaching $67,7698.