FTSE 100 today: London markets could wrestle with recovery as global risk mood sours

Moving Markets Today: Asia Tracks Wall Street Dip, Nikkei Hits 34-Year High, Oil Prices Slide Amid Dollar Strength and Red Sea Concerns, Greenback Reaches One-Month Peak; China’s Economy Surpasses Forecasts, Focus on UK Inflation and U.S. Retail Sales Data 

Mixed earnings from Morgan Stanley and Goldman Sachs led to a decline in U.S. stocks, especially in the banking sector, with selloffs in Boeing and Apple affecting the S&P 500. Asian markets also saw a downturn due to worries about China’s economic situation. However, Japan’s Nikkei reached a 34-year high due to a weaker yen. China’s economy surpassed expectations, growing by 5.2% in 2023, but faced challenges as new home prices fell sharply in December, marking the fastest decline in almost nine years, and the population continued to decrease for the second consecutive year. Oil prices dropped due to a stronger dollar, offsetting concerns about potential disruptions in the Red Sea. Looking ahead to Wednesday, investors are focused on inflation reports in the UK and eurozone, U.S. retail sales data, and Federal Reserve speeches. Here are five key takeaways for your day. 

China’s Economy Grows 5.2% in 2023, Population Shrinks 

China’s economy grew by 5.2% in 2023, slightly below expectations but meeting the government’s annual target despite challenges earlier in the year. This outpaced the 3% growth in 2022. On a quarter-to-quarter basis, GDP saw a 1.0% increase in October-December, meeting expectations and compared to a revised 1.5% gain in the previous quarter. 

New home prices in China fell sharply by 0.4% in December, marking the sixth consecutive monthly decline. Official data also revealed a second consecutive annual population decrease, with 2 million fewer people in 2023, reflecting more deaths than births. Demographers predict this trend will continue as China ages rapidly. 

Israeli Tanks Re-enter Gaza, U.S. Strikes Houthi Missiles 

Israeli tanks re-entered parts of northern Gaza, reigniting intense combat after a brief withdrawal last week. Simultaneously, the U.S. military targeted Houthi-controlled areas in Yemen, where a missile struck a Greek-owned vessel in the Red Sea. Oil prices fell due to a stronger U.S. dollar, but concerns about supply disruptions amid the Red Sea conflict mitigated losses. Brent crude dropped 0.70% to $77.74 per barrel, and U.S. WTI crude fell 0.83% to $71.8 per barrel. 

UK Experiences Impressive Late-Year Wage Growth: Indeed 

By the close of 2023, Indeed’s data shows that wage growth in Britain exceeded that of the United States and the euro zone, Reuters reported. This highlights the Bank of England’s concerns about inflation pressures. Wages in the last quarter of the year increased by 6.6%, a slight slowdown from the 6.7% in the previous three months and a peak of 7.4% in mid-2023. In comparison, both the United States and the euro zone saw a 3.8% growth in pay during the October-to-December period. 

What’s Coming Up 

UK Prime Minister Rishi Sunak is gearing up for a significant parliamentary clash on Wednesday regarding his plan to relocate asylum seekers to Rwanda. A considerable number of his own lawmakers are contemplating rebellion following an initial setback in their bid to strengthen the proposed law. On the economic front, attention will be directed towards the EU’s inflation rate data for December, as well as the UK’s figures for CPI, producer price index (PPI), and the inflation rate data for the Index of Private Housing Rental Prices (IPHRP). Additionally, the November UK House Price Index will be under scrutiny. In the United States, focus will be on the Federal Reserve Beige Book and December’s retail sales figures. 

Markets in Asia Echo Wall Street Decline; U.S. Dollar Soars to Highest Point in a Month 

The S&P 500 closed down 0.37% at 4,765.98 points, with the Nasdaq down 0.19% and the Dow Jones Industrial Average falling 0.62%. Asia stocks declined due to China’s economic challenges, with Hong Kong’s Hang Seng dropping 2.1%, and the CSI 300 falling 0.9%. Despite this, Japan’s Nikkei 225 hit a 34-year peak, rising 0.5%. Morgan Stanley fell 4.2%, Goldman Sachs rose 0.7%, and Apple dropped 1.2% after offering discounts in response to Chinese competition. Advanced Micro Devices jumped 8.3% on raised price targets, while Boeing slumped 8% after the FAA extended the grounding of its 737 MAX 9 planes. In currency markets, the dollar index rose, and gold prices remained stable at $2,028 after a 1% drop.