FTSE 100 today: London set to open red as investors dial back rate cut bets, US inflation in focus
Moving markets today: Asian markets subdued, oil prices steady, gold climbs; Boeing hit by whistleblower claims, New Zealand central bank keeps rates unchanged; All eyes on US inflation, Fed meeting minutes
US stocks rebounded from earlier losses to end the session on a positive note, with investors eyeing the upcoming release of important inflation data. Meanwhile, Asian markets remained cautious, particularly due to concerns surrounding the yen’s performance. The cryptocurrency and blockchain sectors saw declines, mirroring the downward trend in bitcoin prices. Despite uncertainty in the Middle East, oil prices held steady thanks to a buildup in US crude stock, while gold prices experienced a slight uptick. Shares of Boeing took a hit, dropping nearly 2 per cent after reports emerged of a new whistleblower raising safety concerns. In New Zealand, the central bank opted to keep the cash rate unchanged at 5.50 per cent. Fitch downgrades China’s outlook to negative. As the week progresses, investors will be closely monitoring the release of March inflation figures in the US, as well as examining the minutes from the Federal Open Market Committee’s recent policy meeting. Notably, no significant economic releases are scheduled in the UK or the eurozone. Here are five key takeaways for your day.
Boeing under pressure as whistleblower highlights safety concerns
Boeing is facing fresh challenges after a whistleblower raised safety concerns about the manufacturing process of some of its planes to US regulators. Engineer Sam Salehpour accused Boeing of cutting corners in building its 787 and 777 jets.
He alleged that he faced possible termination after bringing up these issues with company leaders. However, Boeing disputed these claims, stating they were inaccurate and expressing confidence in the safety of its aircraft. The company said that rigorous engineering examinations overseen by the Federal Aviation Administration (FAA) had been conducted, confirming that the identified issues posed no safety risks and that the planes would remain serviceable for many years.
Boeing’s stock fell by almost 2 per cent on Tuesday following the FAA’s announcement of an investigation into the allegations. Additionally, the company revealed that it had delivered only 83 planes to customers in the first three months of the year, the lowest number since 2021.
RBNZ stand pat on rates; Fitch downgrades China outlook to negative
The Reserve Bank of New Zealand opted to keep the cash rate steady at 5.50 per cent, emphasizing that prior increases had effectively slowed down economic growth and curbed inflation. However, despite these measures, inflation rates persisted above the bank’s desired target.
According to the RBNZ’s statement, the committee agreed that interest rates would need to remain high for the foreseeable future to ensure that consumer price inflation falls within the target range of 1-3 per cent. This stance reflects a global trend of exercising caution regarding premature rate cuts, as central banks worldwide await further evidence of declining inflationary pressures.
On the other hand, Fitch, a prominent rating agency, delivered a negative outlook for China on Tuesday, highlighting growing concerns regarding the country’s public finances. According to Fitch’s projections, the general government deficit is expected to increase to 7.1 per cent of GDP by 2024, up from 5.8 per cent in the previous year. Despite these challenges, Fitch maintained China’s IDR rating at ‘A+’.
UK cost of living crisis eases for some: FCA survey
A recent survey conducted by the Financial Conduct Authority (FCA) indicates a positive shift in Britain’s cost of living challenges. It suggests that fewer people are struggling to meet their bills and repayments compared to the previous year, while more individuals are effectively managing their finances, Reuters reported.
According to the FCA’s latest financial lives survey, around 7.4 million Britons reported difficulties in paying bills and credit repayments, a decrease from 10.9 million recorded in January 2023. Despite this improvement, the current figure remains higher than the pre-crisis level of 5.8 million reported in February 2020, before the onset of Britain’s cost of living crisis fueled by rising inflation and energy prices. In response to these financial strains, the FCA compelled banks to offer customers payment holidays and other forms of assistance.
What’s on the radar
Investors are eagerly awaiting the release of US consumer price data this Wednesday, as it could offer insights into future interest rate movements. Projections suggest a rise in headline inflation to 3.4 per cent year-on-year, up from February’s 3.2 per cent.
The beginning of this week signals the start of first-quarter earnings season, with major financial players like JPMorgan, Citi, State Street, Wells Fargo, and BlackRock set to disclose their financial results on Friday.
As we approach the end of the week, attention turns to the European Central Bank’s monetary policy meeting. It’s widely expected that interest rates will remain unchanged on April 11, but speculation is mounting for a potential rate cut in June, possibly followed by further adjustments later in the year.
Europe is seeing its inflation rate decline more rapidly compared to other regions, sparking discussions about the possibility of interest rate cuts occurring sooner in Europe than in the US or UK.
Furthermore, due to the observance of Eid al-Fitr, financial markets in several countries, including Saudi Arabia, will be closed from Wednesday until the end of the week to mark the conclusion of Ramadan.
Major Asian stock markets tumble amidst global uncertainty on rate cuts
The Dow Jones Industrial Average saw a slight decrease of 0.02 per cent to settle at 38,883.67. Conversely, the S&P 500 experienced a modest uptick of 0.14 per cent to reach 5,209.91, while the Nasdaq Composite rose by 0.32 per cent to hit 16,306.64. Real estate emerged as the leading sector within the S&P 500, witnessing significant gains, while financials encountered notable setbacks among the eleven major sectors.
Cryptocurrency and blockchain-related stocks mirrored the downward trajectory of bitcoin prices, resulting in a 5.5 per cent decline for Coinbase Global and a 4.8 per cent drop for MicroStrategy. On the flip side, Moderna saw a remarkable surge of 6.2 per cent following promising outcomes from an early-stage trial of its cancer vaccine developed in collaboration with Merck. Alphabet Inc also experienced a 1.1 per cent increase in its shares, inching closer to a milestone $2 trillion market cap.
In Asian markets, there was subdued activity, with investors closely monitoring the potential intervention by Japanese authorities to stabilize the yen’s value. Australian index opened with a 0.5 per cent rise, while Japan’s Nikkei stock index dipped slightly by 0.3 per cent. The Nikkei is eyeing a retest of the 40,000-point mark, partly fuelled by the yen’s depreciation. Hong Kong’s Hang Seng Index kicked off with a 2.0 per cent gain, whereas China’s blue-chip CSI300 index experienced a decline of around 0.4 per cent.
The dollar index slipped to 104.12, with US crude oil prices edging slightly higher to $85.31 a barrel. Brent crude remained steady at $89.47 per barrel. Gold prices saw a slight uptick, with spot gold trading at $2,352.21 per ounce.