Moving markets today: Asia stocks hit record highs; pound steady post-Labour landslide, gold edges higher, US employment data in focus
Asian markets reached new highs on Friday as investors looked forward to potential US rate cuts in September, creating a positive atmosphere. The euro climbed to a three-week high ahead of the French elections. Oil prices were stable in Asian trading but were set for a fourth consecutive week of gains, staying near their highest levels since late April due to strong summer fuel demand and supply concerns. Gold prices edged higher, aiming for a second weekly gain, while traders awaited US employment data to determine the Federal Reserve’s next move on interest rates. In the UK, an exit poll predicted a 170-seat majority for Labour in the election. Samsung reported an unexpected profit rise driven by the AI boom, which boosted chip prices. The US employment report was a key focus on Friday, with expectations of slower hiring and a slight increase in unemployment, which could support the case for rate cuts. The FTSE 100 closed higher on Thursday, and futures pointed to a slightly positive start for Friday.
Here are five key takeaways for your day.
Exit polls show Labour on track for 170-seat majority in UK election
A national exit poll indicates that Sir Keir Starmer’s Labour Party is set to win a substantial majority of approximately 170 seats in the UK general election, ending Rishi Sunak’s Conservatives’ 14-year rule.
The poll suggests that Starmer will become prime minister with 410 out of 650 seats in the House of Commons, while Sunak’s party is expected to suffer its worst defeat ever, securing only 131 seats.
This outcome marks a significant shift in UK politics, moving towards an internationalist, centre-left stance as many countries experience a rise in right-wing populism.
Japan household spending falls unexpectedly, complicating BOJ rate outlook
In May, Japanese household spending saw an unexpected decline as rising prices continued to strain consumers’ purchasing power, complicating the central bank’s decision on interest rate hikes.
Data released on Friday showed a 1.8 per cent drop in consumer spending compared to the previous year, well below the expected 0.1 per cent increase.
Higher food prices reduced spending on other items, and demand for overseas package tours decreased due to the weak yen, which made international travel more expensive. Month-on-month, seasonally adjusted spending fell by 0.3 per cent in May.
Samsung projects massive Q2 profit surge led by semiconductor price rebound
Samsung Electronics has forecasted a substantial surge in its second-quarter operating profit, jumping more than fifteen times compared to the previous year. This impressive growth was driven by increased prices of semiconductors, buoyed by advancements in artificial intelligence.
As the world’s leading producer of memory chips, smartphones, and TVs, Samsung expects its operating profit to have risen to 10.4 trillion won for the quarter ending June 30, up sharply from 670 billion won a year earlier.
Additionally, the company reported a 23 per cent year-over-year increase in revenue for the second quarter, totalling 74 trillion won.
What’s coming up
Several key economic events and indicators are set to unfold soon. Forecasts suggest the upcoming non-farm payrolls (NFPs) report will likely show an addition of 190,000 jobs in June, with the unemployment rate expected to hold steady at 4 per cent.
In the housing sector, the Halifax house price index is anticipated to reveal a modest 0.2 per cent increase for June. Meanwhile, German industrial production is forecasted to see a slight uptick of 0.2 per cent for May.
The UK election results will also be eagerly awaited.
In the Eurozone, market focus will be on speeches from ECB President Lagarde and the release of the ECB Monetary Policy Meeting Accounts, both events carrying significant weight for financial markets and economic analysis.
South Korean stocks drive asian market upward
Asian markets saw significant gains led by South Korean stocks, buoyed by strong earnings reports from major electronics manufacturers released on Friday morning. Japan’s Nikkei N225 and broader Topix indices also reached new record highs, mirroring Taiwan’s TWII benchmark. In South Korea, the Kospi index rose by 0.9 per cent during early trading.
The US dollar index, which measures the dollar against a basket of six major currencies, edged down 0.1 per cent to 105.05, nearing its lowest level since mid-June. Meanwhile, the Japanese yen strengthened slightly to 160.9 per dollar. S&P 500 futures hinted at a potential new record high for the index later in the day, showing slight gains.
In Europe, futures for the EURO STOXX 50 rose by 0.44 per cent, and the FTSE 100, which closed higher by 0.86 per cent on Thursday, indicated a positive start to Friday’s trading with futures up 0.28 per cent at 8,292.0 points.
In commodity markets, gold prices surged towards their largest weekly increase in a month, climbing 1.4 per cent to $2,357 per ounce, supported by a weaker dollar. Oil prices remained strong, with Brent crude futures holding above $87 a barrel following a significant drop in US crude inventories, indicating robust summer demand.
Bitcoin, however, declined by 2 per cent, trading close to a four-month low at $56,955.