FTSE 100 today: London markets likely to open in red following weak global cues
Moving Markets Today: Global Stocks Fall, China Stocks at 5-Year Low, Greenback Nears One-Month Peak, Oil Prices Climb; Attention Turns to Christine Lagarde’s Speech and U.S. Economic Data
Global markets declined as investors adjusted expectations for swift interest rate cuts in the eurozone, UK, and US. Asian stocks followed Wall Street’s downturn. China stocks hit a 5-year low as weak economic data and restricted stimulus measures exert pressure. Oil prices edged up on OPEC‘s demand projection. The US conducted its fourth round of strikes on Houthi targets in response to Red Sea attacks. Investor attention is now on Christine Lagarde’s speech at the World Economic Forum in Davos and upcoming US economic data. Here are five key takeaways for your day.
Australia’s Job Growth Decelerates in December
Australian employment sharply declined in December, reversing two months of unexpected growth and signalling a cooling labour market. Data from the Australian Bureau of Statistics showed a significant drop of 65,100 in net employment, contrasting with the previous month’s surge of 72,600 and defying market expectations of a 17,600 increase. The unemployment rate held at 3.9%, the highest since May 2022, while the participation rate fell from a record high of 67.3% to 66.8%. This downturn adds weight to the suggestion that interest rates may have peaked.
Oil Prices Inch Upward on Optimistic OPEC Demand Projection
Oil prices rose slightly on Thursday due to OPEC’s positive outlook on global demand growth over the next two years. Cold weather disrupting U.S. oil production also contributed to the increase. Brent crude futures reached $78.09 per barrel, up by 27 cents, while U.S. West Texas Intermediate crude futures rose by 36 cents to $72.92. OPEC’s monthly report forecasts a strong growth of 1.85 million barrels per day in global oil demand by 2025, reaching 106.21 million bpd, with the 2024 forecast remaining unchanged at 2.25 million bpd.
US Launches 4th Strike on Houthi Targets Amid Red Sea Incidents
The United States carried out its fourth round of strikes on Houthi targets in Yemen on Wednesday. The Houthi rebel group, backed by Iran, has been attacking commercial shipping in the Red Sea. US forces targeted 14 missiles the Houthis were preparing to launch in Yemen. This comes as the Biden administration addresses the fallout from the Israel-Hamas conflict in Gaza, emphasizing a commitment to preventing a broader war and protecting freedom of navigation in the Red Sea and Gulf of Aden.
Lower Mortgage Rates Soften UK Housing Market Slowdown: RICS Survey
The UK housing market downturn eased in December, driven by increased demand due to lower mortgage rates, according to a Royal Institution of Chartered Surveyors survey reported by Reuters. The RICS measure of new buyer inquiries improved to -3, the least negative since April 2022, from November’s -13. Agreed home sales rose to -6 in December, the highest reading since March 2022, signalling a potential stabilization in the sector.
Asian Markets Mirror Wall Street’s Decline, While U.S. Dollar Hovers Near One-Month High
The Dow Jones Industrial Average fell by 0.25%, closing at 37,266.67, while the S&P 500 and Nasdaq Composite dropped 0.56% and 0.59%, settling at 4,739.21 and 14,855.62, respectively. Asian markets opened cautiously due to concerns about prolonged higher interest rates. Japan’s Topix remained stable, South Korea’s Kospi rose 0.6%, Hong Kong’s Hang Seng index edged up 0.1%, and China’s CSI 300 fell 0.6%, its lowest level since early 2019, rebounding from a recent sell-off tied to official Chinese demographic and economic data for 2023. Japan’s Nikkei 225 continued positively, rising 0.3% near the 34-year peak reached on Wednesday. The 10-year Treasury yield was at 4.0904%, close to Wednesday’s one-month high of 4.1290%, while the two-year yield was at 4.3333%. This kept the dollar index near a one-month high at 103.25. Spot gold gained 0.26%, reaching $2,010.89 per ounce.
Investors are eagerly awaiting economic insights from Raphael Bostic, President of the Federal Reserve Bank of Atlanta, at the Metro Atlanta Chamber meeting and the Atlanta Business Chronicle lunch. ECB President Christine Lagarde will speak at the World Economic Forum in Davos. The European Central Bank will release meeting minutes, and key U.S. data including the Philly Fed Manufacturing Index, December housing starts, Building Permits, and weekly Initial Claims are expected on Thursday.