BBVA's Hostile Bid for Sabadell Shakes Markets

Equities

The FTSE 100 continued its ascent, reaching record highs for a fourth consecutive session after the Bank of England maintained interest rates but hinted at potential rate cuts. The index closed 0.3% higher, having touched a peak of 8,396.25 points during the day. Notably, HSBC Holdings saw its shares dip by 1.9% as it traded ex-dividend, reflecting a temporary drop as the new buyers no longer qualify for the latest dividend payout.

In the mid-cap segment, the FTSE 250 added 0.2%, achieving a 15-month high. Among the standout performers, Harbour Energy, the UK’s largest North Sea oil and gas producer, surged 7.7% following its optimistic outlook for significantly higher free cash flow next year. 3i Group recorded a substantial decline of 5.2% after announcing a fall in its annual total return, impacting its stock adversely.

Across the Atlantic, Dow Jones Industrial Average rose for the seventh straight day, climbing 0.85% to 39,387.76, its highest close since April 1. This uplift was supported by fresh hopes for interest rate cuts following higher than expected weekly jobless claims, suggesting a slowing labour market.

The S&P 500 gained 0.51%, ending the day at 5,214.08 points, marking its highest close since April 9. Roblox plummeted by 22.1% after cutting its annual bookings forecast, indicating reduced consumer spending in an uncertain economic climate. Meanwhile, Apple, Amazon, and Meta Platforms enjoyed gains between 0.6% and 1%, benefiting from the lower Treasury yields.

In contrast, Nvidia slipped 1.8% as it awaited its earnings report, while its sector peer Arm Holdings declined by 2.3% after its full-year revenue forecast fell short of expectations. Additionally, Robinhood Markets dropped 3.1% despite exceeding first-quarter profit estimates, as broader market sentiments weighed on its stock price.

Spirit Airlines, however, bucked the trend with a significant jump of 12.9%, recovering from a record low earlier in the week, buoyed by the broader market optimism and specific corporate developments.

Forex & Commodities

On Thursday, the US dollar weakened against most major currencies following data that suggested a softening in the labour market. Weekly claims for state unemployment benefits in the US rose unexpectedly to 231,000, the highest since late August, surpassing economist predictions of 215,000. This development fuelled speculation about potential interest rate cuts by the Federal Reserve, leading to a decrease in the dollar index by 0.22% to 105.28.

In contrast, the British pound recovered from recent lows after the Bank of England hinted at possible future rate cuts. Despite maintaining the key policy rate at 5.25%, two members of the Monetary Policy Committee voted for a reduction, suggesting a shift could be on the horizon. Consequently, sterling strengthened to $1.2518, up by 0.18% against the dollar.

Gold prices also benefited from the softer US economic data, with spot gold rising 0.3% to $2,353.43 per ounce.

Oil prices saw an uptick as well, influenced by data indicating higher demand and ongoing geopolitical tensions. Brent futures rose 0.6% to $84.41 a barrel, while US West Texas Intermediate crude was up by 0.7% to $79.84.