Palantir Surges 30% while BP Pops After Earnings

Equities

The FTSE 100 Index achieved a near four-week high with a 0.9% rise, buoyed by a standout profit announcement from BP and a surge in China-linked stocks following commitments to stock market support by the world's second-largest economy.

BP led the charge in the UK, with its shares leaping by 5.5% after the energy giant disclosed fourth-quarter earnings that exceeded forecasts and announced an expansion in share buybacks. This performance not only propelled BP to the top of the FTSE charts but also drove the broader oil and gas sector up by 2.2%.

The FTSE 250 Index also saw growth, climbing by 0.8%, bolstered by Renishaw's 16.0% surge after the engineering firm predicted improved trading conditions for the second half of the fiscal year. The financial performance of companies such as Virgin Money UK, which retained its annual profit margin forecast, also contributed to the optimistic market sentiment.

On Tuesday, the S&P 500 Index inched up, closing at a modest gain of 0.23%, marked by investor attentiveness to a diverse range of earnings reports from leading US corporations. The Dow Jones Industrial Average also saw an uplift, rising by 0.37%, while the Nasdaq Composite edged higher by a slight 0.07%.

Palantir Technologies, however, saw its shares skyrocket by 30.8% following an upbeat profit forecast. DuPont de Nemours enjoyed a 7.4% jump in its share price after surpassing fourth-quarter profit expectations, announcing a $1 billion share repurchase program, and increasing its dividend.

The overall earnings season has been favourable, with over half of S&P 500 companies reporting, 81.2% of which have beaten expectations. This performance has contributed to an anticipated 8.1% rise in S&P 500 earnings for the fourth quarter compared to the same period a year ago.

Forex & Commodities

The US dollar experienced a decline against a basket of major currencies, retracting from its peak in nearly three months, influenced by robust US economic figures and the Federal Reserve's firm stance on interest rates. The Fed's recent communications, highlighted by Chair Jerome Powell, have dampened expectations for early and significant rate reductions previously anticipated by the market. Despite this, Cleveland Fed President Loretta Mester acknowledged the possibility of rate cuts should the economy perform as projected, though she remained non-committal on the timing due to inflation uncertainties.

The dollar index saw a decrease of 0.24% to 104.19, reflecting the adjustment in trader expectations regarding the Fed's interest rate path, with a reduced probability of a March rate cut now priced in. This recalibration of expectations also influenced the euro, which appreciated by 0.09% to $1.0751, following positive industrial orders from Germany and reduced inflation expectations in the eurozone.

The Australian dollar gained 0.59% against the US dollar after the Reserve Bank of Australia held rates steady but hinted at potential future monetary tightening. This move was supported by a rebound in the Chinese equity market, which indirectly bolstered sentiment towards the Australian dollar.

Sterling saw a rise of 0.50% to $1.2593, recovering from a seven-week low, buoyed by data suggesting lower-than-expected UK unemployment rates late last year. This has led to speculation that British interest rate cuts may be delayed.

Gold prices increased by 0.6% to $2,035.89 per ounce, benefiting from the dollar's weakness and a dip in US Treasury yields, as market participants await further comments from Fed officials. This week's speeches are anticipated to offer insights into the pace of expected rate cuts, affecting gold's trajectory.