Moving markets today: Asia unfazed as Wall Street hits record highs; Apple shares soar, oil prices rise, China’s consumer inflation stable. Focus on UK GDP, Fed interest rate decision, and US inflation
The S&P 500 and Nasdaq achieved new record highs on Tuesday, buoyed by a remarkable 7 per cent surge in Apple’s shares. Investors eagerly awaited updates on consumer prices and the Federal Reserve’s policy announcement. In Asia, markets remained subdued on Wednesday following reports of soft consumer prices in China. Meanwhile, oil prices experienced a slight uptick due to an optimistic demand outlook. Conversely, gold prices saw a decline, influenced by a stronger dollar as investors awaited key US inflation data and the Fed’s interest rate projections. Today, all eyes are on the Federal Reserve’s fourth meeting of 2024, widely expected to maintain the fed funds interest rate at 5.50 per cent. Additionally, before the market opens, the UK will release its April economic growth data, including a monthly GDP reading. Despite London’s FTSE 100 witnessing its worst performance in nearly two months on Tuesday, futures suggest a positive start to Wednesday’s trading. Here are five key takeaways for your day.
China’s consumer inflation holds steady in May while factory prices fall
In May, China experienced a minor uptick in consumer inflation, while factory prices continued to decline, reflecting sluggish demand amid an ongoing downturn in the country’s real estate market, which stands as the world’s second-largest economy. Official data reveals that the consumer price index (CPI) for May increased by 0.3 per cent year-on-year, mirroring April’s figure and slightly lower than economists’ projected 0.4 per cent rise. On a monthly basis, the CPI dipped by 0.1 per cent. On the other hand, the producer price index (PPI), which monitors changes in industrial product prices, contracted by 1.4 per cent year-on-year, slightly worse than anticipated but showing improvement from April’s 2.5 per cent decline.
Apple shares soar to record high
Apple shares hit a record high, boosting the company’s valuation back over $3 trillion after announcing a partnership with OpenAI to launch a new AI system. The stock jumped 7.3 per cent to $207.15 on Tuesday, marking its biggest one-day increase since November 2022. This brings Apple’s total gain for the year to 7.5 per cent. The surge also made up for Monday’s decline, which followed CEO Tim Cook’s reveal of upcoming software updates. These updates will use AI to enhance Siri’s intelligence and add more personalized features to Apple devices, aimed at increasing productivity.
GameStop secures over $2 billion in stock sale amid meme stock surge
GameStop announced it has raised over $2 billion from a stock sale, benefiting from the renewed interest in “meme stocks” and bolstering its cash reserves. On Tuesday, after the market closed, the video game retailer reported selling the maximum 75 million shares allowed under its at-the-market program, generating $2.1 billion. This comes after GameStop outlined the sale plan last week, following a $933 million raise last month. The return of meme stock investor Roaring Kitty in May has driven GameStop shares up by 73.9 per cent this year, with the stock closing at $30.49 on Tuesday.
What’s coming up
Today’s key economic event is the Federal Reserve policy meeting, where the Fed’s Open Markets Committee (FOMC) is expected to keep the fed funds interest rate steady at 5.50 per cent in its fourth meeting of 2024. The CME Fedwatch tool shows a 0 per cent chance of a rate cut at this meeting.
Before the market opens, the UK will release its economic growth data for April, with a monthly GDP reading expected.
Unlike the recent rate cuts by the Bank of Canada and the European Central Bank, the Bank of Japan is likely to take a different approach in its decision on Friday. The market expects the Bank of Japan to maintain its current interest rates this week and potentially provide more details on its strategy for gradually reducing its large balance sheet, indicating a cautious move away from its extensive monetary stimulus.
Asian shares tepid amid weak China price data
The Dow Jones Industrial Average declined by 0.31 per cent to close at 38,747.42. In contrast, the S&P 500 edged up by 0.27 per cent to 5,375.32, and the Nasdaq Composite saw a significant rise of 0.88 per cent, reaching 17,343.55.
General Motors’ stock climbed 1.35 per cent following the announcement of a $6 billion share buyback plan and a downward revision of its annual EV production forecast. After the market closed, Oracle’s shares jumped 8 per cent on the release of its quarterly results, even though they ended the regular session down 0.5 per cent.
In Asia, China’s CSI300 index fell by 0.1 per cent, while Hong Kong’s Hang Seng index dropped 1.2 per cent, affected by a 27 per cent plummet in China Evergrande New Energy Vehicle Group. This decline followed warnings from its parent company, China Evergrande, about potential asset losses. Meanwhile, Taiwan’s TWII and South Korea’s KS11 indices rose by 0.7 per cent and 0.3 per cent, respectively.
European markets saw the EUROSTOXX 50 futures fall by 1.04 per cent, and London’s FTSE 100 declined by 1 per cent on Tuesday. However, FTSE 100 futures pointed to a positive start on Wednesday, rising by 0.31 per cent to 8174.5. Futures for the S&P 500 and Nasdaq remained flat in Asian trading.
In the currency market, the dollar index held steady at 105.31, maintaining its gains since the payroll report last Friday.
Oil prices continued their upward trend for the third consecutive session, with Brent crude rising 0.35 per cent to $82.22 per barrel and US crude increasing 0.51 per cent to $78.3 per barrel. Gold prices edged slightly lower by 0.11 per cent to $2,313.74 per ounce.