Global leaders and policymakers made tracks for the World Economic Forum in Davos, Switzerland. The FTSE was down. (ASSOCIATED PRESS)
The FTSE 100 and European markets were mixed by the end of the trading day in London, as global leaders and policymakers made tracks for the World Economic Forum (WEF) in Davos, Switzerland.
The FTSE 100 (^FTSE) fell sharply to trade 0.5% lower, while the DAX (^GDAXI) and CAC (^FCHI) rose 0.5% and 0.3% respectively. The pan-European Stoxx 600 (^STOXX) was also up 0.3%.
London's premier index was dragged down by Burberry (BRBY.L) and Ocado (OCDO.L) stock, which were both down more than 5% by the end of the day. Burberry's stock tanked as it cut its profit forecast due to a lull in Christmas sales.
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Davos will play host to a bevvy of high profile meetings and talks this week, with AI and frontier tech at the forefront of minds. Yahoo Finance is covering it live here.
On Monday morning, one of the world's top banking regulators kicked off with a warning that leaders would need to present a united front in coordinating against challenges posed by AI. The chair of the Basel Committee on Banking Supervision Pablo Hernández de Cos said AI “could change the course of history, not necessarily for the good,” the Financial Times reported.
“What we are observing at the geopolitical level shows that reaching common agreements is becoming more and more difficult,” he added, saying this is a "concern" for him and others.
That's all from me for today. Have a splendid evening.
Lucy Harley-McKeown
Oil prices unfazed by Red Sea drama
Here's IG's take on relatively calm oil markets:
Global markets continue to watch nervously to see whether the situation in the Red Sea will escalate further. It certainly looks as if the Houthis will respond to the weekend’s bombing, leading to another response from the US and others. But the lack of a surge in oil prices suggests that demand is just not strong enough at present to drive a new leg higher for crude.
Microsoft (MSFT) CEO Satya Nadella spoke at Chatham House earlier on, offering a more optimistic take on AI's potential impact on the job market than the IMF. He still thinks jobs are in danger, but to a lesser extent.
Yahoo Finance UK reported earlier that Nadella told the audience that every big technological revolution displaces jobs but that the technology will help develop new career skills.
“There will be jobs, the question is the shape of these jobs. If anything, these tools can be very helpful with getting us the skills for what is the new set of tasks,” he said.
“Everyone can become an expert in anything because they have an AI assistant,” he added.
Lucy Harley-McKeown
Currency markets
Neil Wilson from CMC Markets weighs in on FX, in a relatively quiet day:
On currency markets we’ve seen some moderately hawkish chatter from various ECB governing council members, pushing back on the idea of rate cuts in the first half of this year, and which is helping the euro to outperform while acting as a drag on European equity markets.
Bundesbank President Joachim Nagel said that markets were too optimistic about the prospect of rate cuts and that it might be the summer before the topic is discussed.
Austrian ECB member Robert Holzmann was less circumspect saying that markets shouldn’t count on rate cuts in 2024 at all, and that he doesn’t see a “real recession coming”, which seems an odd thing to say, as if there are recessions that aren’t real?
Despite this pushback, markets are still pricing in the prospect of 4 rate cuts this year, which is still 2 less than is being priced for the US where the economy is much stronger.
The US dollar is also slightly better bid with the worst performers being the Japanese yen and New Zealand dollar.
Lucy Harley-McKeown
House prices on the up
And now to the housing market, where house prices are increasing again, according to Rightmove. Here's Yahoo Finance UK's take from earlier:
Asking prices on newly-listed homes rose 1.3% to £359,748, in the biggest December to January increase in prices since 2020.
The rise equates to a £4,571-increase month-on-month but average prices are still 0.7% lower than at this time last year, according to Rightmove.
The number of properties coming to market for sale is also 15% higher than at the start of last year, with the North East and South West seeing the greatest addition of new choice for the increased number of new buyers.
The property site said the jump in the number of properties coming to market and the strength of this month’s price rise show that new sellers are more confident about the outlook for the year ahead.
Lucy Harley-McKeown
Is Davos really where it's at these days?
While some still insist Davos is the place to be, its champagne swilling elite seem to have turned others off.
Financial News is reporting today on "conference fatigue', as Bank of England governor Andrew Bailey, Dame Anne Richards of Fidelity International, John Studzinski of Pimco and Hendrik du Toit of Ninety One decide to sit this one out.
FN also has a line from financier Bill Browder ironically criticising the event for being a "money-making machine". It has been "degraded by commercialism," he added.
Lucy Harley-McKeown
Trending ticker: Baidu
Baidu (9888.HK) has piqued interest today due to links to the Chinese military. Yahoo Finance UK reporter Pedro Goncalves explains here:
Shares in the search engine firm plunged by almost 12% after a report linked its Ernie AI platform to Chinese military research into artificial intelligence.
The South China Morning Post reported that scientists at Chinese military labs were testing an artificial intelligence system based on the company’s large-language model ErnieBot.
Baidu said in a statement that it “has no affiliation or other partnership with the academic institution in question.”
Despite the denial, the report fuelled concerns that any potential affiliation with the Chinese military could attract sanctions from the US.
Baidu debuted Ernie, the country’s earliest answer to OpenAI’s ChatGPT, in 2023 and amassed 100 million users in the months after its public rollout.
Lucy Harley-McKeown
AI to hit 40% of jobs, says IMF
AI is coming for your jobs, according to a new IMF blog post.
The international financial agency found almost 40% of jobs could be impacted by the rise of AI.
"Historically, automation and information technology have tended to affect routine tasks, but one of the things that sets AI apart is its ability to impact high-skilled jobs," it wrote. "As a result, advanced economies face greater risks from AI—but also more opportunities to leverage its benefits—compared with emerging market and developing economies."
The potential impact is higher in advanced economies, where about 60 percent of jobs may be impacted by AI, the analysis showed.
Roughly half the exposed jobs may benefit from AI integration, enhancing productivity. For the other half, AI applications may execute key tasks currently performed by humans, which could lower labor demand, leading to lower wages and reduced hiring. In the most extreme cases, some of these jobs may disappear.
Lucy Harley-McKeown
Four ECB rate cuts predicted for 2024
Economists expect four European Central Bank (ECB) rate cuts in the coming year, a report on Monday said.
Bloomberg reported that the cuts of 25 bps each could kick in in June, with reductions in September, October and December bringing the rate to 3%.
Recent policy moves and hints have left rates on hold for the bloc, which has hiked 10 times since mid-2022.
The poll follows predictions that the Bank of England could begin cutting sooner than expected, as inflation is forecast to hit 2% by April due to a slump in oil and energy prices.
Lucy Harley-McKeown
A summary of the morning
Here we have a potted summary of the morning /weekend by Finalto chief market analyst Neil Wilson:
Risk off tone to start the week: European stock markets were softer in early trade on Monday as the week got off to a relatively quiet, risk-averse start, with US markets set to stay shut for a holiday. Taiwan’s stock market rose a touch after the pro-independence party won the presidential election but saw its parliamentary majority reduced. Chinese equities fell as the central bank kept a key lending rate unchanged. Bitcoin fell after the spot ETF debut. Some folks are in Davos to talk AI and elections. Oil was steady after retreating from a surge on Friday as the US and UK engage Houthi rebels in the Red Sea. Hardly Mad Mitch stuff though I’m afraid.
Lucy Harley-McKeown
FTSE risers and fallers
An early look at the risers and fallers of the FTSE 100 (^FTSE)shows:
It was a mixed day of trade for Asian indices, with Japan's Nikkei (^N225) leading the pack in terms of daily gains. It was up 0.9% in the session, trading above the 35,000 mark. It hasn't broken through 35,000 since the 1990s as it built on gains from the previous week.
Meanwhile Chinese stocks were mixed. The Hang Seng (^HSI) fell 0.2% as China's central bank opted to hold its interest rates at 2.5%. Growth in the region has come into focus in recent months amid fears of stalling growth for one of the world's largest economies.
Friday also spelt a mixed day for US stocks, which we will be watching at the open later on.
Lucy Harley-McKeown
Good morning!
Good morning from frosty London, where we're gearing up for a day of following the news in Davos. AI is the topic on global leaders lips as we trudge through blue Monday. So, let's get to it.
Watch: Wars loom as global elite gather in Davos
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