Moving markets: Five things shaping the FTSE 100 today

Moving markets: Five things shaping the FTSE 100 today

Moving Markets Today: Asia stocks struggle despite China rate cut, oil prices stable, BoE’s Bailey speech and Nvidia earnings take centre stage

Asian shares grappled to exceed levels seen in the past 1-1/2 months, even as China’s interest rate cut, which was larger than anticipated, failed to energize investors who were hoping for more robust stimulus actions. Meanwhile, oil prices held steady near their three-week highs amid rising tensions in the Middle East. Investors eagerly await Bank of England Governor Andrew Bailey’s speech, while all eyes are on Nvidia’s earnings release scheduled for Wednesday, as the AI sector continues to expand its influence across various stocks. Here are five key takeaways for your day.

China’s central bank slashes mortgage rates to revitalize property market

China’s central bank slashed the benchmark mortgage interest rate on Tuesday in a bid to jumpstart the country’s sluggish property market and boost its struggling economy. The People’s Bank of China announced a reduction in the five-year loan prime rate from 4.20% to 3.90%, surprising economists who had expected a median rate of 4.10% based on a Bloomberg poll of 12 economists. Meanwhile, the one-year rate remained stable at 3.45%.

Pension fund demand spurs revival in UK corporate bond market: FT

The Financial Times has reported that pension funds are increasingly turning to UK corporate bonds, leading some French and German companies to issue debt in sterling for the first time. Analysts indicate that the UK’s defined benefit pensions industry, valued at GBP1.4 trillion, is transitioning to corporate debt due to its higher yields and as a preparation for potential sales to insurers. The percentage of European corporate bond sales denominated in sterling has risen from 6.8 percent to 8.4 percent since the start of 2023, marking the busiest beginning to the year in a decade for investment-grade issuance from non-financial companies.

Middle East tensions keep oil prices near three-week highs

Oil prices showed little movement, staying close to their highest levels in three weeks, buoyed by escalating tensions in the Middle East and a rebound in demand from China. Brent futures edged down by 8 cents to settle at $83.48 per barrel, while U.S. West Texas Intermediate (WTI) crude for April delivery saw a slight decrease of 10 cents, reaching $78.36 per barrel. However, the March WTI contract experienced a modest increase of 26 cents, reaching $79.45 per barrel, as traders readied themselves for the contract’s expiration later in the day.

All eyes on Nvidia earnings

As corporate earnings reports come into focus, attention centres on key industry players like Nvidia in the tech sector and major retailers such as Walmart in the U.S. market. Nvidia is set to unveil its quarterly earnings on Wednesday, February 21st, with analysts forecasting earnings per share of $4.56 and a significant surge in quarterly revenue to $20.378 billion, compared to $6.05 billion a year ago. Meanwhile, Walmart is expected to announce an increase in fourth-quarter sales, reflecting the crucial holiday shopping season.

In the UK, the spotlight shifts to banks following NatWest’s positive financial results released last Friday. Market watchers are eager to see if other banks can meet similar expectations in the upcoming days. Moreover, a lineup of central bank speakers will provide insights, alongside the publication of monetary policy meeting minutes from the U.S. Federal Reserve and the European Central Bank, according to reports from the Financial Times and Reuters.

Asian equities falter despite China’s central bank’s mortgage rate cut

In the realm of Asian markets, Hong Kong’s Hang Seng index saw a minor uptick of 0.1%, while China’s CSI 300 experienced a slight dip of 0.2%. This movement came in response to the announcement from the People’s Bank of China regarding the reduction of the five-year lending rate. Despite South Korea’s Kospi revealing promising consumer sentiment data, it stumbled by 1.2% in early trading. Over in Japan, the Topix index faced a 0.3% decline, and the Nikkei 225 slipped by 0.1%, reflecting the uncertainty among traders amid the absence of guidance from US equities, which observed closure on Monday for Presidents’ Day.

On the financial front, ten-year U.S. Treasury yields observed a modest rise of 1.4 basis points, settling at 4.31% , while two-year yields remained stable at 4.65 percent. In the commodities sector during the Asian morning, Brent crude futures experienced a marginal downturn, while the price of gold remained steady at $2,018 per ounce.