Moving markets today: Asian stocks drop on speculation of delayed Fed cuts; gold set for weekly decline; US regulator greenlights Ethereum ETFs; attention on UK retail sales and US consumer confidence
The US stock market saw a reversal, initially rising but later dipping due to concerns about a tight labour market, despite Nvidia’s impressive performance. Meanwhile, Asian stocks fell on Friday, while the dollar strengthened as strong US economic data hinted at the likelihood of extended higher interest rates. Oil prices remained steady as increased US gasoline demand offset worries about interest rate changes. Gold is on track for its first weekly decline in three weeks amid diminishing expectations for rate cuts. Additionally, a US regulator approved Ethereum ETFs, marking a significant development in the cryptocurrency market. In the UK, consumer confidence hit its highest level since December 2021. In Japan, April’s inflation slowed further to 2.2 per cent. Investors are awaiting the UK’s April retail sales figures, expected to show a 0.4 per cent decline following a stagnant March. In the US, upcoming releases include April durable goods orders and the University of Michigan’s May consumer confidence survey. Germany will also report its Q1 GDP. Here are five key takeaways for your day.
UK consumer confidence surges to highest since December 2021: GfK
British consumer confidence soared in May, hitting its highest level in nearly two and a half years before Prime Minister Rishi Sunak’s election announcement. The GfK Consumer Confidence Index rose by two points to -17, its strongest reading since December 2021, despite economists’ expectations of -18. While four out of five components measuring economic and personal financial confidence improved, the major purchase index saw a slight decline, Reuters reported.
Japan’s April inflation eases to 2.2 per cent
In April, Japan experienced a second consecutive slowdown in core inflation, mainly attributed to less significant increases in food prices. However, this inflation measure remained comfortably above the central bank’s 2 per cent target.
Government data released on Friday showed that the nationwide core consumer price index (CPI), excluding fresh food items, rose by 2.2 per cent compared to the previous year, down from a 2.6 per cent rise in March, which was in line with market expectations, Reuters reported.
Additionally, the “core core” index, which excludes both fresh food and energy costs and is closely monitored by the Bank of Japan for broader inflation trends, increased by 2.4 per cent, down from the 2.9 per cent rise observed in March.
US regulator paves way for ethereum ETFs
The US Securities and Exchange Commission (SEC) has given the green light for exchange-traded funds (ETFs) directly tied to ether, the second-largest cryptocurrency globally, to potentially launch later this year, the FT reported.
This approval, revealed in a regulatory filing, specifically supports rule changes for eight ETFs targeting ether, the primary digital currency of the Ethereum blockchain. However, before these ETFs, which are backed by notable names like BlackRock, Fidelity, Grayscale Investments, and Ark Invest, can be introduced to the market, they require further approvals.
Once launched, these ether ETFs would follow the introduction of the first spot bitcoin ETFs in the US, which occurred in January.
What’s coming up
At the end of the week, investors will be paying close attention to the UK’s retail sales figures for April, which are anticipated to have dropped by 0.4 per cent month-on-month after remaining flat in March.
In the US, the Department of Commerce will release data on durable goods orders for April, and the University of Michigan will publish its consumer confidence survey results for May.
Over in Germany, the focus will be on the first-quarter gross domestic product report.
The US and the UK markets will be on holiday on Monday, May 27.
Asian stocks drop amid delayed US Fed rate cut bets
The Dow Jones Industrial Average dropped 1.53 per cent to 39,065.26, while the S&P 500 and Nasdaq Composite also saw losses, falling 0.74 per cent to 5,267.84 and 0.39 per cent to 16,736.03, respectively.
Nvidia’s performance was a bright spot, lifting the S&P 500 tech index by 0.56 per cent, the only one of the 11 major S&P sectors to gain on Thursday. However, the overall chip sector didn’t fare as well, with the PHLX semiconductor index dipping slightly by 0.02 per cent.
DuPont announced it would split into three separate publicly traded companies, with its stock rising 0.48 per cent despite being significantly down from earlier highs. Live Nation, owner of Ticketmaster, tumbled 7.81 per cent following a lawsuit from the US Justice Department and a coalition of 30 states and the District of Columbia seeking to break up the concert promoter.
In Asian markets, Japan’s Nikkei N225 fell 1.45 per cent, and Chinese stocks were mostly flat in early trading, with the blue-chip CSI300 index down 0.05 per cent amid ongoing Chinese military exercises around Taiwan. Hong Kong’s Hang Seng Index also declined by 0.33 per cent.
In the commodities market, oil prices held steady, with Brent crude at $81.39 per barrel and US West Texas Intermediate (WTI) at $76.87. Gold prices edged up 0.24 per cent to $2,334.16 per ounce but are on track for a 3.3 per cent decline for the week.