FTSE 100 today: London markets set to open lower amid reduced US Fed rate cut bets
Moving markets today: Asian stocks follow Wall Street gains; Broadcom surges, oil prices dip; focus on US producer prices, Treasury auctions
US stocks closed at new record highs for the third consecutive day, driven by a softer-than-expected inflation report for May and indications from Federal Reserve officials of a potential single interest rate cut in 2024. Asian stocks followed this positive trend. However, oil prices slipped on concerns about US economic growth and ample crude supply. Gold prices also fell after the Federal Reserve’s latest projections suggested only one rate cut this year, disappointing some investors. In the UK, the housing market showed signs of weakening as expectations for a rate cut diminished, according to a survey by RICS. Meanwhile, the Bank of Japan is reportedly considering a gradual reduction in bond purchases, as reported by the Nikkei newspaper. Broadcom’s stock surged after it raised its revenue forecast, citing strong demand for AI products. Looking ahead, market attention remains focused on US producer inflation data due on Thursday. Despite London stocks rebounding on Wednesday, futures suggest a weak start to Thursday’s trading. Here are five key takeaways for your day.
UK housing market weakens as rate cut expectations diminish: RICS survey
Britain’s housing market lost steam in May as hopes for immediate rate cuts by the Bank of England waned, causing a decline in buyer demand and house prices, according to a survey released on Thursday. The Royal Institution of Chartered Surveyors (RICS) reported that its house price net balance fell to -17 from a revised -7 in April, the lowest since January. Additionally, the index for new buyer inquiries dropped to -8 in May from -1 in April, hitting its lowest level since November, Reuters reported.
Bank of Japan to discuss gradual reduction in bond purchases, says Nikkei
The Bank of Japan is planning to discuss reducing its bond purchases at its policy meeting ending on Friday, according to the Nikkei newspaper. This move would be a crucial step towards cutting down its almost $5 trillion balance sheet. The nine-member board will consider a plan to slowly decrease the balance sheet by modifying the range of its monthly government bond purchases. The Nikkei did not provide sources for this information.
Broadcom surges with raised revenue forecast amid soaring AI demand
Broadcom increased its full-year revenue forecast to $51 billion, up from $50 billion, driven by strong demand for its AI products. The company also announced a 10-for-one stock split, which boosted its shares in after-hours trading. Broadcom’s second-quarter revenue and adjusted net income exceeded analysts’ expectations.
The stock split will take effect after the market closes on July 11. On Wednesday, Broadcom’s stock rose 2.4 per cent to close at $1,495.51 and jumped another 12 per cent in after-hours trading. CEO Hock Tan credited the impressive second-quarter performance to high AI demand and VMware, with AI product revenue reaching a record $3.1 billion for the quarter.
What’s on the radar
On Thursday, market attention will be centred on US producer inflation data. The Department of Labor is releasing the May producer price index, which will help economists predict the Fed’s preferred PCE inflation for that month. At the same time, new weekly unemployment claims data will be available. Investors will also be watching the US Treasury auctions for 4-week bills and 30-year bonds. In the UK, no major economic reports are expected.
South Korean stocks lead Asia’s market gains
Overnight, the S&P 500 climbed to 5,421.03 and the Nasdaq Composite rose to 17,608.44. The small-cap Russell 2000 also posted a gain of 1.6 per cent. While the Dow Jones Industrial Average dipped slightly to 38,712.21.
Apple’s shares surged by as much as 6.3 per cent intraday, briefly reclaiming its position as the most valuable US stock ahead of Microsoft. However, Apple couldn’t maintain this lead, ending the day with a 2.9 per cent increase, while Microsoft rose by 1.5 per cent.
European markets saw the EUROSTOXX 50 futures rose by 1.39 per cent, and London’s FTSE 100 jumped 0.8 per cent on Wednesday. However, FTSE 100 futures pointed to a weak start on Thursday, declining by 0.38 per cent to 8205.0.
In Asia, stock markets showed overall gains, led by South Korea’s Kospi index, which rose by 1.4 per cent. South Korea’s decision to approve oil and gas exploration off its coast boosted sectors like construction and gas industries. Hong Kong’s Hang Seng index climbed by 0.8 per cent, while China’s CSI 300 remained stable. Japanese stocks showed mixed performance.
Oil prices declined at the beginning of trading on Thursday: Brent crude futures slipped to $82.46 per barrel, down by 0.17 per cent, and US West Texas Intermediate (WTI) crude futures fell to $78.34 per barrel, a decrease of 0.2 per cent, despite both benchmarks making gains of around 0.8 per cent in the previous session.
Gold prices also saw a decline: spot gold dropped by 0.5 per cent to $2,311.50 per ounce, and US gold futures fell by 1.2 per cent to $2,327.20 per ounce.