S&P 500 Drops as Investors Eye US, UK PMI Data

The S&P 500 fell nearly 0.5% on Thursday, while the Dow dropped 1% as investors awaited key PMI data from the US, UK, and eurozone. UK retail sales for January are also in focus after December’s unexpected decline, alongside US manufacturing data, which may show the impact of Trump's tariffs. Meanwhile, in Asia, Chinese tech stocks surged, pushing Hong Kong’s Hang Seng Tech Index up nearly 30% year-to-date.

Equities

The FTSE 100 fell 0.6% on Thursday, marking its third consecutive decline as mixed corporate earnings and concerns over inflation weighed on sentiment. The drop was driven by losses in several major companies, including BP, AstraZeneca, EasyJet, Imperial Brands, and GSK, which all traded ex-dividend.

Lloyds Banking Group rose 4.9%, leading the index after announcing a £1.7 billion share buyback and reaffirming its financial targets for 2026. Anglo American gained 2.5% after confirming a merger between its Los Bronces copper mine in Chile and state-backed Codelco's Andina mine, despite posting a $3.1 billion loss due to a writedown of its De Beers diamond business.

Ferrexpo saw the steepest decline, plummeting 30% following Ukraine’s move to nationalise its Poltava mining and processing plant, the company’s largest asset, amid an investigation into alleged illegal mining.

The FTSE 250 also declined 0.5%, dragged down by Carnival, which saw losses amid broader concerns over consumer spending. Rio Tinto edged up 0.5%, reporting its lowest full-year earnings in five years, as weaker commodity prices weighed on performance.

In the US, the S&P 500 fell 0.43%, while the Dow Jones dropped 1.01%, and the Nasdaq declined 0.47%. The market was hit by worries over tariffs and a weak sales forecast from Walmart, which signalled slowing consumer demand. Walmart shares dropped 6.5%, pulling down other major retailers Target (-2.0%) and Costco (-2.6%). Meanwhile, Palantir Technologies lost 5.2% after the Pentagon signalled potential budget cuts for 2026, raising concerns about future government contracts.

Alibaba's US-listed shares jumped 8.1% following better-than-expected third-quarter revenue. Hasbro surged 13% after the toymaker reported higher-than-expected profits and revenue, while Baxter International rose 8.5% on an improved 2025 profit outlook.

Forex & Commodities

The US dollar was near its lowest level this year, with traders adjusting expectations around Donald Trump’s tariff policies. The yen initially strengthened past 149 per dollar after Japan’s core inflation hit a 19-month high in January, but it later weakened to 150.51 per dollar following comments from Bank of Japan Governor Kazuo Ueda, who signalled possible government bond purchases to stabilise markets. The British pound rose to $1.2674, its highest since mid-December.

The euro held steady at $1.0493, supported by expectations ahead of Germany’s general election this weekend. Meanwhile, the Australian and New Zealand dollars reached their highest levels this year, with the Aussie surpassing $0.64 and the Kiwi at $0.5772, helped by renewed optimism over a potential US-China trade agreement. The Chinese yuan hit a one-month high after Trump suggested that President Xi Jinping could visit the US.

Gold fell 0.4% to $2,927.89 per ounce, pulling back from a record high of $2,954.69, but remained on track for its eighth straight weekly gain amid ongoing concerns over Trump’s tariff threats. Silver and palladium were both set for weekly gains, while platinum slipped 1% this week.

Brent crude oil was steady at $76.45 per barrel, while US West Texas Intermediate crude held at $72.44. Both benchmarks were up more than 2% this week, supported by strong demand from China and lower US gasoline and distillate inventories. Concerns over supply disruptions in Russia and a drone attack on the Caspian Pipeline Consortium also contributed to higher prices.