Moving markets today: Asian stocks drop amid Middle East tensions, gold rises; oil and bitcoin decline; All eyes on UK inflation, US retail sales, and corporate earnings from Goldman Sachs, Bank of America, Blackstone, American Express and Netflix
Chinese stocks saw gains while other Asian markets faced declines, driven by escalating tensions in the Middle East after Iran’s missile strike on Israel. This geopolitical turmoil led to a drop in oil prices as investors sought to reduce risk. Meanwhile, gold prices slightly increased, remaining near record highs, as investors sought the safety of gold amid the uncertainty. US President Joe Biden called for restraint from Israel in response to Iran’s attack, aiming to de-escalate tensions and avoid a full-scale regional conflict. Apple experienced a significant decline of 9.6 per cent in global iPhone shipments during the first quarter of 2024. Additionally, China’s central bank kept its key policy rates unchanged. In the week ahead, investor focus is expected to shift away from the US despite the start of the first quarter earnings season. Key events include the release of the February UK employment report on Tuesday and consumer and producer price data on Wednesday. Geopolitical tensions in the Middle East remain a closely watched factor following Iran’s attack on Israel. Here are five key takeaways for your day.
Apple’s iPhone shipments fall 9.6 per cent in Q1: IDC report
In the initial quarter of 2024, Apple saw a decline of 9.6 per cent in its worldwide iPhone shipments compared to the same period in 2023, as reported by the International Data Corporation (IDC), the FT reported.
During this time, Samsung, based in Korea, overtook Apple to become the leading global supplier of smartphones. Despite this, there was a positive trend in the global smartphone market, with shipments increasing by 7.8 per cent year over year, indicating a broader recovery across the industry.
Apple’s iPhone sales in China have been impacted by increased competition from Huawei and regulatory actions by the Chinese government. These measures include restrictions on the use of Apple devices by government officials.
China central bank holds firm on key policy rates; capital markets activity plunges to historic lows
China‘s central bank decided to keep a crucial policy interest rate steady on Monday as expected. This decision came as the bank renewed existing medium-term loans and withdrew some liquidity from the banking system by utilizing bond instruments.
The People’s Bank of China (PBOC) announced that it would maintain the rate on 100 billion yuan worth of one-year MLF loans to specific financial institutions at 2.50 per cent. All 31 market analysts surveyed by Reuters predicted that the bank would maintain the rate. With 170 billion yuan of MLF loans set to expire this month, the action resulted in a net withdrawal of 70 billion yuan from the banking system.
Activity in China‘s stock markets, both domestically and internationally, has declined significantly, reaching multi-decade lows. This decline underscores how the slowdown in the world’s second-largest economy has dampened investor confidence. According to data from Dealogic, Chinese companies have raised only $6.4 billion through mainland IPOs, follow-on offerings, and convertible share offerings this year—the lowest level on record.
President Joe Biden calls for Israeli restraint following Iran’s drone and missile assault
President Joe Biden has urged Israel to practice restraint following a drone and missile attack by Iran. This call comes as part of the United States’ efforts to ease tensions in the Middle East and prevent a wider regional conflict. Israeli officials, led by Prime Minister Netanyahu’s five-member war cabinet, discussed potential responses to the attack on Sunday, the FT reported.
However, there were differences of opinion within the cabinet regarding the timing and scale of any retaliatory action.
According to Israeli sources, Iran launched a barrage of more than 300 projectiles, including 170 drones, 30 cruise missiles, and 120 ballistic missiles targeting Israel. The attacks began late Saturday and continued for several hours. Additionally, militants backed by Iran in Lebanon, Iraq, and Yemen also launched rockets, drones, and missiles towards Israel.
Upcoming events and trends to watch
We’re now right in the middle of earnings season, where many financial companies are reporting their latest results. Keep an eye on big names like Goldman Sachs, Bank of America, Blackstone, and American Express. Among them, all eyes are on Netflix to see if it can maintain the impressive growth it showed at the end of last year.
Monday’s release of monthly US retail sales will give us a glimpse into consumer spending, following a recent inflation report that surprised analysts. Federal Reserve Chair Jerome Powell is also scheduled to speak on Tuesday.
Tuesday brings the much-awaited UK employment report for February, followed by consumer and producer price data on Wednesday. Over in China, we’ll see a flurry of activity indicators for March on Wednesday as well.
Finance ministers from around the world will gather for the International Monetary Fund’s Spring meetings from April 15 to 20 to discuss global economic trends and challenges.
Escalating tensions in the Middle East, sparked by Iran’s attack on Israel, are a cause for concern, especially with Israel’s declaration of preparedness to defend itself.
This week also holds significance for democracy, with various countries, notably India, beginning their election processes. India’s 44-day parliamentary election starts on Friday, with Narendra Modi’s Bharatiya Janata Party expected to continue its leadership for another five years.
Asia stock markets tumble, gold glitters as middle east unrest spurs safe-haven demand
In Asia, China’s CSI 300 index saw a 0.9 per cent increase, contrasting with declines in stock markets in Japan, Hong Kong, and South Korea. Japan’s Nikkei 225 index, heavily reliant on exports, experienced the most significant drop, falling by 1.3 per cent, while the yen weakened by 0.18 per cent against the dollar, hitting its lowest level since 1990.
In the United States, stock futures slightly rose following a significant sell-off on Wall Street driven by disappointing performances from major US banks. Both S&P 500 futures and Nasdaq futures increased by roughly 0.30 per cent.
Despite geopolitical tensions, futures for Brent crude, the global benchmark, dipped by 0.1 per cent to $90.37 per barrel, and West Texas Intermediate decreased by 0.2 per cent to $85.51 per barrel.
Escalating tensions prompted investors to seek safety, leading to a rise in gold prices by 0.51 per cent to $2,356.39 per ounce and strengthening the safe-haven dollar, which surged by 1.6 per cent from the previous week.
The yield on the benchmark 10-year Treasury bond stood at 4.5277 per cent, while the two-year yield remained close to 5 per cent, at 4.8966 per cent. Bitcoin’s value dropped by nearly 3 per cent to $65,281, falling below $62,000 on Sunday.