Moving markets today: Asian stocks rally in sync with Wall Street surge, oil and gold prices soar; Roblox stock plummets; UK Q1 GDP data eyes
The S&P 500 index surged to its highest point in a month as traders anticipated potential rate cuts following lacklustre labour market data. Across Asia, stocks rallied on renewed hopes for global rate cuts. Meanwhile, oil prices climbed due to strong economic indicators from China and escalating tensions in the Middle East. Gold prices strengthened, marking their best week since April 5, as recent economic data fueled expectations of a Federal Reserve interest rate cut. However, major players in the gilt-edged market are split on whether the Bank of England will implement its first rate cut in June or August. On a different front, shares of video game giant Roblox experienced a sharp decline following a revised outlook. Looking ahead, focus will shift to the initial reading of the UK Gross Domestic Product (GDP) for Q1 and the US Michigan Consumer Sentiment report on Friday. Here are five key takeaways for your day.
GEMMs split on BOE’s first rate cut: June or August?
Major players in the gilt-edged market, known as GEMMs, are divided on when the Bank of England (BoE) might implement its first rate cut. According to a compilation of views from six GEMMs by City AM, three anticipate the rate cut occurring in June, while the other three suggest it might happen in August. Among these, Morgan Stanley, Deutsche Bank, and HSBC are among those foreseeing a rate cut in June, whereas JP Morgan, Nomura, and Royal Bank of Canada are among those predicting it for August.
Roblox stock plummets following downgraded outlook
Roblox, a major player in the video game industry, saw its stock take a steep dive, dropping by more than a fifth. This plunge came after the company released a revenue and bookings forecast for the quarter that didn’t meet expectations, highlighting ongoing challenges in the sector.
Known for its platform where users can create and play games, Roblox faced pressure due to reduced spending on in-game purchases in a tough consumer environment.
Shares fell by around 22 per cent during Thursday afternoon trading as the company’s projected bookings of $870 million to $900 million and revenue ranging between $855 million and $880 million for the current quarter fell short of what analysts had anticipated, the FT reported.
Oil prices ride high on escalating Middle East tensions
Oil prices saw a rise, driven by positive signs of economic improvement in China and ongoing tensions between Israel and Hamas. Brent futures edged up by 0.44 per cent, reaching $84.25 per barrel, while US West Texas Intermediate crude increased by 0.56 per cent, hitting $79.70.
Amidst reports of Israeli forces bombarding areas of Rafah on Thursday, Prime Minister Benjamin Netanyahu dismissed President Joe Biden’s warning about potential consequences for assaulting the southern Gaza city. This occurred alongside news that China’s exports and imports rebounded in April after a previous month’s contraction, indicating a resurgence in demand.
What’s coming up
Keep an eye out for the latest update on the UK’s GDP growth rate for the first quarter, especially since the Bank of England decided to maintain interest rates on Thursday but hinted at a possible future rate cut.
Additionally, there’s discussion about earnings reports from IAG and how the concept of ‘revenge travel’ might affect airline profits. This discussion also touches on challenges such as tensions in the Middle East and issues with Boeing deliveries, highlighting specific trends within the sector and their potential impact on future performance.
In the upcoming week, markets will closely watch the release of the April US producer price index (PPI) and consumer price index (CPI) data. Investors are eager to see if these figures suggest that inflation is moving back towards the Federal Reserve’s target rate of 2 per cent.
Asian stock market rally echoes Wall Street surge
Thursday saw a positive turn for the US stock market, with the S&P 500 index climbing by 0.5 per cent to reach 5,214.08 points, marking its highest level since April 1. This uptick was supported by the majority of its participants seeing gains during the trading session. Similarly, the Nasdaq Composite, known for its focus on technology stocks, experienced a modest 0.3 per cent increase to hit 16,346.27 points, driven by gains in four notable stocks.
However, both Tesla and Nvidia faced declines over a three-day period. The Russell 2000 index, which concentrates on smaller-cap stocks, also saw a notable uptrend, closing 0.9 per cent higher at 2,073.63 points, its highest level in a month.
This positive momentum echoed across the Atlantic, where stocks in the UK and Europe also saw gains. This was partly due to speculation that the Bank of England might adopt a more accommodative monetary policy in the summer months if inflation remains subdued.
Among the S&P’s major sectors, ten out of eleven showed positive movements, with the real estate sector leading with a 2.3 per cent rise. Equinix, a data center operator, stood out with a remarkable surge of 11.5 per cent following its encouraging first-quarter results.
In Asia, Japan’s Nikkei 225 index surged by 1.6 per cent, while China’s stock market also showed gains, with the blue-chip CSI300 index rising by 0.14 per cent. Hong Kong’s Hang Seng Index performed even better, surging by 1.4 per cent and reaching its highest level in eight months during early trading.
Meanwhile, the dollar index, which measures the US dollar against six major currencies, remained relatively stable at 105.24. Additionally, the price of spot gold experienced a modest increase of 0.3 per cent, reaching $2,352.92 per ounce.