AstraZeneca weighs on FTSE, S&P Tiptoes Around 5K

Equities

Major US stock indices displayed a positive trend with the S&P 500 nearing the significant 5,000-point threshold. This upward movement was mirrored by gains in the Dow Jones Industrial Average and the Nasdaq Composite. The performance of these indices came as investors digested a mix of earnings reports and economic data, including a slight dip in US jobless claims.

The FTSE 100's trajectory was less favourable, where weakness was largely influenced by AstraZeneca's disappointing earnings announcement. The pharmaceutical giant saw its shares tumble by over 6%, closing at their lowest since October 2022, after fourth-quarter profits fell short of analysts' expectations. This was attributed to increased research and development expenses and price cuts for some medications in emerging markets, despite the company projecting strong growth in 2024.

In contrast, British American Tobacco enjoyed a surge in its share price, climbing 7.1% following news of its intentions to divest some of its stake in India's ITC. This move is part of a strategy to reduce debt and potentially resume share buybacks. Meanwhile, consumer goods behemoth Unilever reported a rise in fourth-quarter sales and announced a 1.5 billion euro share buyback programme, which resulted in a 3.2% increase in its share price.

In Asia, the Nikkei 225 surged to its highest level in 34 years, buoyed by dovish comments from the Bank of Japan, while China's stock indices also posted gains, welcoming leadership changes at the country's market regulator and digesting the latest consumer price index data.

Forex & Commodities

On Thursday, the US dollar appreciated following a report indicating a stronger-than-anticipated US labour market, suggesting a sustained economic resilience. This development further solidified the Federal Reserve's stance on maintaining current interest rates, with little indication of imminent cuts. Unemployment claims in the US for the week ending February 3 fell to 218,000, surpassing economists' expectations and underscoring the robustness of the labour market despite recent layoffs. This data, reinforcing the dollar's strength, pushed the dollar index up by 0.14% to 104.16.

The British pound experienced a slight decline of 0.11% against the dollar, trading at $1.2613. In the currency markets, the yen also weakened against the dollar, declining by approximately 0.82% to 149.380, influenced by the Bank of Japan's Deputy Governor's remarks on the unlikelihood of aggressive interest rate hikes.

Gold prices dipped marginally by 0.13% to $2,031.58 per ounce, influenced by the strengthening dollar and rising bond yields, which dampened the appeal of the non-yielding asset. Palladium extended its losses, touching a five-year low, amid concerns over long-term demand and comparisons with platinum prices, which have historically been higher.

Oil prices witnessed a significant increase of over 3% following geopolitical tensions in the Middle East and a stronger-than-expected drawdown in US fuel stocks. Brent futures escalated by 3% to $81.36 a barrel, and West Texas Intermediate crude saw a 3.2% rise to $76.22, driven by the rejection of a ceasefire in Gaza by Israel and the impact of refinery maintenance in the US and diesel shortages in Europe.