Moving markets today: Asian shares dip as Wall Street retreats; oil prices drop, gold eyes second weekly gain, UK consumer confidence hits highest since Nov 2021; focus shifts to global PMIs and UK retail sales
US stocks pulled back from their recent highs, ending the Nasdaq Composite’s longest winning streak of the year. Across Asia, markets closed the week quietly after profit-taking followed a rally earlier in the week that had pushed shares to their highest levels in 26 months. Crude oil prices fell at the start of trading on Friday due to expectations of sustained high interest rates in both Asia and the United States, although a decrease in US oil inventories prevented a sharper decline in prices. Meanwhile, gold prices are poised for a second consecutive weekly increase, fueled by growing expectations of potential interest rate cuts. In the UK, consumer confidence has surged to its highest level since November 2021, as reported by GfK. In Japan, inflation driven by consumer demand moderated in May, adding uncertainty to the Bank of Japan’s plans for future interest rate hikes. Additionally, Revolut is targeting a valuation exceeding $40 billion through a sale of shares to employees. As the week draws to a close, investors are closely watching preliminary survey results for June that will assess economic activity in the manufacturing and services sectors across the UK, euro area, and US. FTSE 100 hit near a two-week high on Thursday, with futures indicating a positive start for Friday’s trading session. Here are five key takeaways for your day.
UK consumer confidence hits highest level since November 2021: GfK
This month, British consumers are feeling notably more optimistic, reaching a level of confidence not seen in two and a half years, according to a recent survey. The GfK consumer confidence index, a well-established gauge in the UK, rose to -14 in June from -17 in May. This increase marks the highest level since November 2021.
Despite lingering concerns about personal finances, households’ outlook on the broader economy has improved, overshadowing these worries. Back in September 2022, consumer sentiment had plunged to a record low of -49, coinciding with a sharp rise in energy prices that pushed inflation to its highest level in more than four decades, surpassing 11 per cent.
Japan’s demand-driven inflation cools, muddying BOJ rate hike outlook
In May, Japan’s inflation rate slowed to its lowest level since September 2022, creating challenges for the Bank of Japan as it considers further rate hikes.
According to official data released on Friday, the core consumer price index, which excludes fresh food prices, rose 2.5 per cent annually, up from 2.2 per cent the previous month, driven by the end of gas and electricity subsidies.
Meanwhile, the “core-core” index, which removes both food and energy prices, decreased to 2.1 per cent from April’s 2.4 per cent, marking its ninth straight month of decline due to weak domestic consumption.
Revolut targets $40 billion+ valuation in employee share sale
UK fintech giant Revolut is aiming for a valuation of over $40 billion in an upcoming share sale, a move that would solidify its position as Europe’s most valuable start-up, according to sources familiar with the matter.
Backed by SoftBank, Revolut is working with Morgan Stanley to sell around $500 million worth of existing shares, including those held by employees. This new valuation would be at least 20 per cent higher than its $33 billion valuation from a 2021 fundraising round.
If successful, Revolut’s market value would surpass that of UK lender NatWest and Paris-based Société Générale, and would be comparable to Lloyds Banking Group, the FT reported.
What’s on the radar
As the week wraps up, investors will be paying close attention to preliminary survey results for June that assess manufacturing and services activities in the UK, euro area, and the US. The Purchasing Managers’ Indices (PMIs) are expected to indicate stronger growth in the UK and euro area, while the US is likely to show a slowdown.
Similar expectations apply to the French PMIs, making it interesting to see if economists’ forecasts are accurate. Additionally, the UK will release public sector borrowing and retail sales figures for May.
In the US, data on existing home sales for May is also on the schedule for release.
Asian stocks fall amid decline in US markets
The Dow Jones Industrial Average rose by 0.77 per cent to close at 39,134.76 points, while the S&P 500 slightly declined by 0.25 per cent to 5,473.17 points, and the Nasdaq Composite fell by 0.79 per cent to 17,721.59 points. Nvidia experienced a notable 3.5 per cent drop in its stock price, which pushed its market value below that of Microsoft once again, despite briefly holding the title of the world’s most valuable company.
Kroger saw its stock price decrease by 3.27 per cent after expressing caution about consumer spending in the near term, even though it exceeded expectations for the first quarter and reaffirmed its full-year forecasts for same-store sales and profits.
Meanwhile, Trump Media & Technology Group faced a significant decline of 14.56 per cent due to concerns over potential dilution of equity following the US Securities and Exchange Commission’s approval of the company’s filing for a resale of certain shares and warrants, which raised around $247 million.
In Europe, EURO STOXX 50 futures rose by 0.06 per cent. The FTSE 100 managed a 0.8 per cent gain on Thursday, and its futures suggested a positive start on Friday, increasing by 0.08 per cent to 8,279.5 points.
In Asia, Japan’s Nikkei N225 index edged up by 0.1 per cent, while the yen weakened slightly by 0.1 per cent to 159.01 against the dollar, marking its lowest level since late April when authorities intervened to stabilise its rapid decline.
Chinese stocks remained mostly unchanged, with the Shanghai Composite index struggling to stay above the critical level of 3,000 points, while Hong Kong’s Hang Seng index dropped by 0.9 per cent.
Oil prices stabilized on Friday after earlier hitting their highest levels in seven weeks. Brent crude futures slipped by 0.1 per cent to $85.59 per barrel, and US crude also dipped by 0.1 per cent to $81.19 per barrel. Meanwhile, gold prices held steady at $2,358.83 per ounce.