FTSE 100 today: London markets set to extend positive streak; trends hinge on US inflation data

Moving markets today: Asian stocks track Wall Street surge, BHP and Sony shares soar, oil prices rise amid Canadian wildfires; focus shifts to US CPI and Burberry earnings 

The Nasdaq hit a new record high at closing, with both the S&P 500 and the Dow also making gains, largely due to a late-day surge in the stocks of major technology companies. Asian markets followed this trend, rising on the back of a strong performance by tech stocks in the US. Oil prices climbed as wildfires threatened production in Canada, while the price of gold remained steady as traders awaited US economic data for clues about the Federal Reserve’s actions. Sony’s stock saw a significant increase following the announcement of a buyback plan and an improved outlook. BHP Group shares rose by 2.4 per cent on Wednesday following Anglo American breakup plan announcement to fend off a $43 billion takeover bid. China’s central bank decided to maintain its key policy rate. In a move intensifying trade tensions, President Biden imposed fresh tariffs on imports from China. Investors are now eagerly awaiting Wednesday’s US consumer prices report, which is expected to show a 0.3 per cent increase in the Consumer Price Index (CPI) for April, a slight drop from the previous month’s 0.4 per cent growth. Here are five key takeaways for your day. 

China’s central bank keeps key policy rate unchanged

China’s central bank opted to keep its key policy rate steady as it extended medium-term loans that were due on Wednesday, meeting the expectations of the market. The People’s Bank of China (PBOC) announced that it would maintain the interest rate on 125 billion yuan worth of one-year medium-term lending facility (MLF) loans to certain financial institutions at 2.50 per cent, unchanged from the previous operation. 

Biden unleashes fresh tariffs on Chinese goods, fuelling trade tensions

President Joe Biden has introduced hefty tariffs on a range of Chinese products, spanning from electric vehicles and advanced batteries to solar cells, steel, aluminum, and medical equipment. In this move, he not only took aim at Donald Trump’s previous policies but also heightened the friction between the world’s largest economies.  

Biden’s strategy involves retaining some of the tariffs set by his Republican predecessor while elevating others, notably quadrupling tariffs on electric vehicles to over 100 per cent and doubling semiconductor tariffs to 50 per cent. 

Sony’s stock soars on share buyback and improved outlook

Sony’s stock prices experienced a significant surge of up to 12 per cent on Wednesday morning following the announcement of impressive earnings, a proposed stock split, and a share buyback totaling ¥250 billion, the FT reported. 

Additionally, Sony revised its forecast, anticipating a 5 per cent rise in operating profit by March 2025, largely attributed to the growing demand for its image sensors. 

The market responded positively to the updated guidance, as well as to the strong performance of Sony’s latest PlayStation game, Helldivers 2. The company’s decision to initiate a five-for-one stock split was particularly welcomed, as it aims to attract more individual investors to the stock. 

During the earnings call held on Tuesday, Hiroki Totoki, Sony’s CFO, chose not to comment on the reported interest of Sony and private equity group Apollo in acquiring entertainment company Paramount Global. 

What‘s coming up

Wednesday is gearing up to be a significant day, mainly because of the much-awaited US consumer price report, which is seen as the week’s main risk event. It’s anticipated that the Department of Labor will reveal a slight drop in the year-on-year increase in consumer prices for April, down to 3.4 per cent. At the same time, the rate of core CPI gains is expected to slow from 3.8 per cent to 3.6 per cent. 

Alongside this report, there’s also keen interest in the release of US retail sales data for April. Eurostat will be sharing first-quarter employment and GDP figures for the euro area, along with industrial production data for March.  

However, the UK doesn’t have any major economic releases scheduled for the day. 

Investors will be keeping a close eye on Burberry’s earnings report for the 2024 fiscal year in the corporate world.  

It’s worth noting that markets in Hong Kong, Macau, and South Korea will be closed to mark Buddha’s birthday. 

Asian stocks mirror Wall Street surge ahead of US CPI report

Overnight, the Dow Jones Industrial Average edged up by 0.32 per cent, reaching 39,558.11 points. Similarly, the S&P 500 saw a gain of 0.48 per cent, closing at 5,246.68, and the Nasdaq Composite surged by 0.75 per cent to 16,511.18.  

Notably, all seven prominent stocks experienced increases, with Tesla leading the pack with a notable 3.3 per cent jump. In terms of sectors, technology stocks led the charge with a 0.9 per cent uptick, while consumer staples experienced a slight dip of 0.2 per cent. 

Across Asia, Japan’s Nikkei N225 rose by 0.58 per cent, but Chinese stocks opened lower, with the CSI300 down by 0.16 per cent and Hong Kong’s Hang Seng Index dropping by 0.22 per cent. Meanwhile, Japan and Australia saw positive movements in their equity benchmarks, whereas Hong Kong’s market remained subdued due to a holiday. 

The shares of BHP Group listed on the Australian stock exchange, experienced a 2.4 per cent increase. This boost came after Anglo American, the company targeted for acquisition by BHP, revealed a defensive strategy against a $43 billion takeover bid by outlining a breakup plan. 

The dollar index held steady at 105.01. The yen traded at 156.36 per dollar, hitting a two-week low of 156.80 earlier in the week, amid speculation about potential interventions from Japanese authorities. 

In the commodities market, oil prices ticked up slightly due to wildfires threatening Canada’s oil sands and expectations of a decrease in US crude oil and gasoline inventories later in the day. US crude reached $78.59 per barrel, rising by 0.73 per cent, while Brent crude stood at $82.89 per barrel, showing a 0.62 per cent increase.  

Spot gold remained relatively unchanged at $2,357 per ounce.