S&P 500 Reaches 5000, Barratt to buy Redrow

Equities

On Wednesday, Wall Street witnessed a notable upswing, with the S&P 500 achieving a record closing high having touched the 5000 level for the first time intraday. This surge in investor sentiment was largely attributed to robust US earnings reports and keen anticipation for any hints regarding future interest rate movements from the Federal Reserve.

In the UK, however, the narrative was somewhat different, with the FTSE 100 index facing a decline, dropping by 0.7%. This downturn was influenced by investor concerns over Sainsbury's ambitious spending plans and Barratt Developments' decision to acquire Redrow in a deal valued at approximately £2.52 billion, causing Barratt's shares to fall by 5.5%. Conversely, Redrow's shares surged by 14.8%, marking a significant gain. There were mixed reactions from other homebuilders like Crest Nicholson and Bellway, which enjoyed gains on the day.

Sainsbury's saw a 6.1% decline in its share price after unveiling a new cost-saving target and shareholder returns strategy. Tesco and M&S also faced downward pressure, dropping 3.4% and 1.6% respectively.

US companies Snap Inc. and Uber Technologies garnered attention for different reasons. Snap's shares plummeted by 34.6% following a disappointing quarterly revenue report, whereas Uber's shares saw a modest increase of 0.3% after forecasting higher-than-expected core profit and gross bookings for the quarter.

Forex & Commodities

On Wednesday, the US dollar experienced a slight decline as markets awaited new data to guide future movements. This followed a period of consolidation after the currency had strengthened due to unexpectedly robust US economic figures and Federal Reserve officials' resistance to the anticipated interest rate cuts. The euro saw an increase against the dollar, indicating a slight easing of the dollar's strength.

The upcoming Consumer Price Index data, expected on February 13, is highly anticipated as it could significantly influence market direction. The dollar's recent rally was seen as somewhat excessive by analysts, who noted resistance levels being tested.

The British pound appreciated against the dollar, buoyed by higher house prices that suggested the Bank of England might not lower interest rates in the near future. This movement reflects ongoing adjustments in market expectations for central bank policies in both the US and the UK, with particular attention paid to inflation data and its implications for interest rates.

Oil prices saw an uptick, driven by escalating tensions in the Middle East and a weakening dollar, which makes oil cheaper for holders of other currencies. This was compounded by a more significant than expected decrease in US gasoline and distillate stocks, indicating robust demand and supporting higher oil prices.