Dow Rebounds After Bank Earnings, Yen Surges Overnight

Wall Street rallied on robust bank earnings, with Goldman Sachs, JPMorgan Chase, Wells Fargo, and Citigroup posting gains alongside lower US Treasury yields following softer-than-expected inflation data. The yen climbed to a one-month high as Bank of Japan Governor Kazuo Ueda hinted at a potential rate hike, heightening market anticipation.

Equities

The FTSE 100 rose 1.2%, with its midcap counterpart, the FTSE 250, jumping 2.9%, marking its strongest gain since mid-December. UK equities rallied on the back of unexpectedly subdued inflation data, which bolstered expectations of a rate cut by the Bank of England.

Currys led the charge, surging 11% after the retailer raised its annual profit outlook, buoyed by a 2% rise in underlying Christmas trading sales. British banks also performed strongly, with Standard Chartered, Barclays, and NatWest climbing between 3.3% and 6.6%.

Across the Atlantic, Wall Street’s major indices posted their best daily gains in over two months. The Dow Jones added 1.65% to close at 43,221.55, while the S&P 500 advanced 1.83% to 5,949.91, and the Nasdaq Composite rose 2.45% to 19,511.23. These gains followed favourable inflation data and strong bank earnings. The S&P 500 bank index rallied underpinned by the strength of the sector's financial results. This came amid declining Treasury yields, which retreated from a recent peak, offering further support to the markets.

Goldman Sachs led the Dow’s rise, climbing 6.02% on its best quarterly profit since 2021, contributing 214 points to the index. Wells Fargo jumped 6.69% after surpassing fourth-quarter profit expectations, boosted by a surge in dealmaking activity.

JPMorgan gained 1.97% as it reported record annual profits, reflecting robust market conditions in the last quarter. Citigroup also delivered strong results, rising 6.49% after returning to profitability in Q4.

In addition, an agreement to end the conflict in Gaza after 15 months of hostilities contributed to an improved global sentiment, reflected in broad market advances.

Forex & Commodities

The US dollar slipped, with the dollar index hovering around 109 after softer-than-expected US core inflation data. This renewed hopes for Federal Reserve rate cuts later this year, with traders pricing in nearly 38 basis points of cuts in 2025. The Indian rupee fell 0.1% to 86.4850 per dollar, pressured by importer demand for dollars, despite support from portfolio inflows that previously drove its strongest session in seven months.

Gold prices steadied near a one-month peak at $2,696.69 per ounce, following softer US inflation data that bolstered expectations of monetary easing by the Federal Reserve. US gold futures edged up 0.3% to $2,726.60. Bullion demand was supported by prospects of rate cuts reducing the opportunity cost of holding non-yielding assets, though a ceasefire agreement between Israel and Hamas capped further gains. Silver rose 0.5% to $30.8 per ounce, with platinum and palladium moving in mixed directions.

Oil prices continued their upward trend, nearing six-month highs. Brent crude rose 0.3% to $82.26 per barrel, while US West Texas Intermediate gained 0.4% to $80.32. The rise followed a sharper-than-expected drop in US crude stocks, which fell by 2 million barrels last week, as reported by the Energy Information Administration.