Dollar Surges, FTSE Plunges in Market Sell-Off

Equities

Almost all listed companies in the UK’s benchmark index closed in the red, marking a dire day for UK equities. Dr Martens, a renowned bootmaker, saw its share price collapse by 29.4% to a record low. This drastic fall came after the announcement of a new CEO and a forecast of challenging times ahead, particularly due to weak demand in the US market.

Additionally, Superdry’s stock suffered a significant decline, dropping 23.8%. The fashion retailer announced a restructuring plan which includes taking the company private through an equity raise, amidst ongoing struggles in the retail sector.

In the US, the Dow Jones Industrial Average slightly rose by 0.17%, gaining from positive earnings reports, particularly from UnitedHealth Group, which exceeded first-quarter profit expectations. However, the S&P 500 dipped by 0.21%, and the Nasdaq Composite dropped by 0.12%. This comes with generally cautious investor sentiment, balancing positive US economic growth signs against concerns about inflation and interest rates.

Shares of Morgan Stanley climbed 2.5% after reporting a stronger-than-expected profit, bolstered by a resurgence in investment banking revenue. Conversely, Bank of America saw its shares fall by 3.5% following a disappointing earnings report where profits declined due to increased provisions for loan losses.

Johnson & Johnson’s shares slid 2.1% as the company’s revenue fell short of market forecasts, primarily due to underperforming sales from its leading psoriasis drug, Stelara. Additionally, Tesla’s shares declined by 2.7%, continuing a downward trend after announcing significant workforce reductions.

Forex & Commodities

On Tuesday, the US dollar reached a five-month peak against the euro, following comments from Federal Reserve Chair Jerome Powell indicating that interest rates might remain elevated longer due to persistent inflation. This rise in the dollar also saw it achieve its strongest position against the Japanese yen since 1990, amid speculation over potential interventions by Japanese authorities to support their currency.

Amidst these currency shifts, gold prices have remained stable, despite expectations of fewer US rate cuts this year. Spot gold was little changed, hovering around $2,382.72 per ounce. This follows a recent spike to a record high, driven by safe-haven demand amidst escalating tensions in the Middle East.

In the oil markets, prices have declined. Brent futures dropped to $89.62 a barrel, and US crude to $84.88, influenced by concerns over global demand. These concerns are particularly acute given the weak economic momentum in China, the world's largest oil importer, which despite a faster than expected GDP growth in the first quarter, showed frail domestic demand in March.