Dollar Dipped Before Busy Week for Inflation Stats

Equities

The FTSE 100 closed higher on Friday, bolstered by Standard Chartered after the bank announced significant investor payouts. Despite this uplift, the index saw marginal losses over the week, attributed to mixed corporate earnings. Standard Chartered's share price soared by 4.9% following the announcement of dividends and a $1 billion buyback, spurred by an 18% rise in annual profit. This performance significantly contributed to a 0.9% increase in the FTSE 350 banks index. However, the broader sentiment was tempered by a decline in British consumer confidence and cautious expectations for interest rate cuts from global central banks, with the Bank of England's first rate cut now anticipated in August.

Barclays shares were little changed after a US judge ruled the bank must face part of a class action lawsuit related to its sale of excessive debt. The mid-cap FTSE 250 index fell by 0.4%, dragged down by a 4.2% decrease in Domino's Pizza Group's shares after Barclays downgraded the stock from "overweight" to "equal weight."

Across the Atlantic, the S&P 500 in the United States reached new highs, driven by strong corporate results, with Nvidia's impressive earnings spotlighting the fourth-quarter reporting period. The tech giant's shares surged, pushing the S&P 500 up by more than 6.7% this year. With most companies having reported, S&P 500 firms are on track to achieve a 10% increase in fourth-quarter earnings from the previous year, marking the most significant rise since the first quarter of 2022.

Forex & Commodities

The US dollar index saw its first weekly decline in 2024, marking a pause in its nearly two-month rally. This shift comes as expectations for the Federal Reserve to start reducing interest rates have been adjusted to June from May.

Gold prices have experienced a rise, supported by the dollar's weakness and increased safe-haven demand amid escalating tensions in the Middle East. This week, gold saw a 1.4% increase, with spot gold advancing 0.8%.

Oil prices, on the other hand, have seen a downturn, continuing losses from the previous session as the dollar strengthened. This is in response to higher-than-anticipated inflation figures, which might delay the anticipated cuts to the US interest rates, impacting global fuel demand growth. Brent crude and West Texas Intermediate crude both recorded declines, influenced by a shift in market expectations towards a more prolonged period of high US interest rates.

Economic indicators and central bank policies remain focal points for markets, with upcoming data releases, particularly the Personal Consumption Expenditures (PCE) index, eagerly awaited for further insights into Fed policy directions. Meanwhile, the euro has shown little change against the dollar, reflecting market reactions to various economic signals and central bank communications, including comments from ECB President Christine Lagarde on wage growth and inflation.