Moving markets today: Asian markets echo Wall Street’s rise; oil prices rebound, gold hovers near one-week low, bitcoin stable; all eyes on global PMIs and Tesla’s earnings
Stocks on Wall Street closed higher on Monday, bouncing back from recent losses, as investors turned their attention to upcoming quarterly reports from major companies. This positive sentiment extended to Asian markets on Tuesday, following Wall Street’s lead. Oil prices showed some recovery after significant drops, while gold prices inched up despite lingering concerns about the Middle East. Despite the recent halving event, Bitcoin’s price remained largely unaffected. Investors are anticipating the Bank of England to implement its first rate cut by August. China reported the creation of 3.03 million new urban jobs in the first quarter, indicating some stability in its employment market. Financial markets will closely monitor purchasing managers’ surveys for insights into economic activity in various regions. Tesla’s earnings report, scheduled for release after the market close on Tuesday, is expected to garner significant attention from investors. Here are five key takeaways for your day.
Interest rate futures forecast first Bank of England rate cut for August
Interest rate futures are now indicating a full expectation that the Bank of England will implement a quarter-point rate cut by August, with the anticipation of at least two cuts before the year’s end. This suggests a shift towards an earlier timeline for monetary easing compared to last week’s projections.
Specifically, futures contracts imply a reduction of 28 basis points by the BoE’s August 1 meeting, rising to 57 basis points by December 19. This contrasts with the pricing observed the previous Friday, which stood at 17 basis points and 42 basis points respectively, Reuters reported.
On Monday, the FTSE 100 hit a record closing high of 8023.87 points, boosted by expectations of interest rate cuts.
In contrast, regarding the US Federal Reserve, traders are predicting the first rate cut to likely occur in September. The overall expected easing for the year is forecasted to be a modest 40 basis points, marking a significant departure from the approximately 150 basis points of cuts anticipated at the beginning of the year.
China adds 3.03 million urban jobs in Q1
On Tuesday, a representative from China’s Ministry of Human Resources revealed that the country saw the creation of 3.03 million new urban jobs in the first quarter. They emphasized that the employment situation overall remained steady. China had previously set a goal in March to generate more than 12 million new urban jobs throughout 2024.
In contrast, shares of a Chinese bubble tea company experienced a sharp decline of 30 per cent on their inaugural trading day after being listed on the Hong Kong Stock Exchange.
Japan’s factory contraction eases in April: PMI
A recent survey showed Japan’s manufacturing sector contracting in April but nearing the break-even point, hinting at a potential turnaround after months of sluggishness.
The au Jibun Bank flash Japan manufacturing purchasing managers’ index (PMI) rose to 49.9 from 48.2 in March, though it remained below the growth threshold of 50.0 for the 11th straight month. Nevertheless, this marked the closest the index has been to break even since June.
What’s front and centre in the news
This week, the focus is on corporate earnings reports, featuring prominent companies such as Tesla, Meta Platforms, Alphabet, and Microsoft, collectively referred to as the “Magnificent Seven” due to their significant contribution to the S&P 500’s remarkable 24 per cent gain last year. Boeing, amid its own challenges, will disclose its first-quarter figures on Wednesday, just before Airbus.
While economic announcements are limited this week, attention will be on Thursday’s unveiling of US first-quarter growth data. On Tuesday, the latest purchasing managers’ index reports for G7 nations and India will provide insights into global economic trends.
The Bank of Japan is anticipated to maintain interest rates at its Friday meeting, though market observers will closely scrutinize its Outlook Report.
Moreover, Friday will witness the release of the monthly US Personal Consumption Expenditures Price Index, a crucial inflation gauge preceding the Fed’s April 30-May 1 meeting. Notably, expectations for interest rate cuts have diminished, with Fed funds futures now indicating less than 40 basis points in cuts for the year, a decrease from the 150 bps forecasted at the outset of 2024.
Asian markets mirror Wall Street’s upward trend
The S&P 500 edged up by 0.87 per cent to hit 5,010.60, while the Nasdaq Composite surged by 1.11 per cent, reaching 15,451.31. The Dow Jones Industrial Average also joined the upward trend, rising by 0.67 per cent to hit 38,239.98. Big players like Alphabet, Amazon.com, and Apple saw modest gains ranging from 0.5 per cent to 1.5 per cent, while Nvidia bounced back with a 4.4 per cent increase after a recent dip.
Tesla, however, didn’t fare as well, experiencing its seventh consecutive decline with a 3.4 per cent drop ahead of its upcoming earnings report.
In Asia, markets generally followed Wall Street’s lead with Taiwan and Hong Kong both showing positive momentum, rising by 1 per cent and 0.8 per cent respectively. Japan’s Nikkei remained steady, but Chinese shares faced a slight setback, with blue chips losing 0.6 per cent.
The dollar remained strong, showing a nearly 5 per cent gain for the year, with the latest trade hovering around 106.09.
Oil prices showed signs of recovery from previous losses amid ongoing assessments of the Middle East situation. Brent futures climbed by 0.4 per cent to $87.35 a barrel, while US crude also gained 0.4 per cent to reach $82.24 a barrel.
Gold prices, however, experienced a decline of 0.74 per cent, reaching $2,309.14 per ounce following a significant overnight slump of 2.7 per cent. Meanwhile, in the realm of cryptocurrencies, bitcoin saw a slight increase of 0.51 per cent, reaching $66,879.00.