Reckitt Shares Pummelled, Markets Await Fed

Equities

The FTSE 100 index fell slightly by 0.2% on Friday, weighed down by the steep fall in Reckitt Benckiser's share value, which tumbled 13% following a lawsuit penalty concerning its baby formula. This marked the most significant drop for the company since December 1999. Conversely, Vodafone saw its shares surge 5.7% after announcing the sale of its Italian unit, providing a positive highlight in the UK market.

Switching focus to the US, the S&P 500 saw a downturn, primarily driven by tech giants, reflecting a broader trend of investors reassessing the value of technology stocks amidst shifting economic signals. Notably, Adobe's shares plummeted by 13.7% after projecting lower-than-expected future revenue, which impacted investor sentiment towards tech stocks broadly. This was emblematic of the challenges faced by the tech sector, further underscored by Microsoft's 2.1% decline, contributing significantly to the S&P 500's losses.

The Dow Jones and Nasdaq also recorded declines. In broader US markets, the volume of shares traded spiked, attributed to the 'triple witching' event, where various derivatives expire simultaneously, often leading to increased trading activity. Despite some sectors facing declines, there were more advancing than declining issues on the New York Stock Exchange, suggesting a mixed but active market environment.

Forex & Commodities

Attention turns to a series of central bank meetings around the globe, with particular focus on the Bank of Japan (BOJ) potentially moving away from negative interest rates, a decision that could mark a significant policy shift. Meanwhile, the Federal Reserve's upcoming meeting has traders speculating on the number of rate cuts projected for the year, amidst hotter-than-expected US inflation data which has prompted a reconsideration of future rate adjustments.

The US dollar has shown resilience, maintaining its strength in anticipation of the Fed's decisions. The Australian dollar remains stable, with Australia's central bank expected to keep rates unchanged, while the New Zealand dollar saw a slight uptick. The euro and the British pound are also in focus, with the Bank of England anticipated to maintain its current rate stance in its upcoming meeting.

Gold prices have steadied, facing their first weekly drop in four, as market participants adjust their expectations for US interest rate cuts. This recalibration comes in the wake of recent data indicating persistent inflationary pressures, which could impact monetary policy decisions moving forward.

Oil prices have edged up, building on the previous week's gains amid supply concerns and geopolitical tensions affecting Russian energy infrastructure.