Spreadex Market Update
Next Hits Record High, PBOC Intervenes on Yuan
Equities
The FTSE 100 made significant strides, closing at its highest point since May 2023, buoyed by a promising 4.5% uplift in the investment banking sector. This rally was further supported by a near 1.0% decline in the pound against the dollar, benefiting the index's export-driven companies.
The Bank of England's decision to maintain interest rates at 5.25%, coupled with expectations for inflation to fall below the 2% target, spurred financial stocks and added to the optimism.
Next stood out with a 6.7% surge to a record high following a reported profit that exceeded expectations for the 2023-24 period. However, not all news was positive, as Dowlais Group faced its worst day on record with a 9.7% fall after projecting current-year revenue to mirror 2023 levels.
The US stock market witnessed a broadening rally, with sectors like financials, industrials, and energy outpacing the S&P 500's 9.7% year-to-date gain. This shift was largely attributed to a more dovish stance from the Federal Reserve, inspiring confidence in a resilient economy and a gradual reduction in inflation.
Forex & Commodities
The US dollar has strengthened for a second consecutive week, influenced by shifts in global interest rate policies. A notable move by the Swiss National Bank, with its surprise rate cut, set the tone, contrasting sharply with the Federal Reserve's stance, where rates remain on hold between 5.25% and 5.5%.
The British pound dipped to a one-month low after the Bank of England maintained interest rates, sparking speculation of an earlier-than-expected rate cut.
Gold prices saw an uptick as the dollar softened, bolstered by anticipations of a Federal Reserve rate cut in June. Spot gold rose slightly to $2,166.39 per ounce. Traders are pricing in a 74% chance of a rate cut by the Fed in June, with expectations partly fuelled by recent high inflation readings despite the central bank's forecast for three rate cuts by the end of 2024.
Brent crude oil futures and US crude futures both saw modest gains on Friday after attacks on energy facilities in Russia, Ukraine and the Middle East, alongside a decrease in the US oil rig count, hinting at tighter future supply.
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