Global News Round-up: 03/02/23
Big tech companies such as Apple, Amazon, and Alphabet have recently posted results that show a slowdown in the global tech economy. Apple’s sales fell more than analysts predicted, Amazon’s revenue was trimmed by soft consumer demand, and Alphabet’s results missed Wall Street estimates. These results have dented confidence in the tech rally and have led to a decline in the companies’ stock prices. Despite these setbacks, each company is working on ways to move past the slump.
The European Central Bank is trying to convince investors that it will be one of the last to raise interest rates. Despite signals from other central banks that they are easing up on monetary tightening, euro-zone officials insist that their own anti-inflation efforts will not let up. However, the ECB is at risk of appearing isolated as investors are increasingly confident that the global inflation shock is fading.
Gautam Adani, the billionaire behind the Adani Group, has seen a $58 billion wipeout in his personal fortune in just six trading days. This downfall is significant, but Adani still oversees a large conglomerate that builds infrastructure in line with the development goals of Prime Minister Narendra Modi.
The world was reminded of the importance of manual processing in derivatives trading this week as a cyberattack on a London-based software company resulted in traders and brokers turning to spreadsheets to keep track of their deals. The company, ION Trading UK, is critical to the functioning of stock, bond, and commodities markets.
The UK economy is facing the bleakest outlook in generations as more Britons stop working. The fall in the labor force participation rate during the pandemic has not reversed course, leading to a decrease in potential growth and productivity. The UK is weak on both counts, which has a significant impact on the economy.
Gold has once again proven to be a hedge against currency volatility, soaring to a record high in pound terms. The outlook for the US currency and momentum on the gold chart will determine if it reaches all-time highs in dollar terms.
In the light today is:
London’s FTSE 100 index hit an all-time high of 7,906 today, following a strong start to 2023. The index, dominated by companies generating revenues majorly from outside the UK, has grown 6.1% so far this year due to cooling global inflation and speculation that central banks may slow down their interest rate rises. The hints from the Bank of England on Thursday that it may be close to ending its interest rate hike cycle helped push the FTSE over its previous peak in May 2018. The UK stock market has underperformed compared to other equity markets, particularly the US, in recent years due to a lack of large technology companies. However, oil companies and banks have helped the FTSE dodge the global equity rout in 2022, making it the best-performing developed market index. The devaluation of sterling against the euro and the dollar since Brexit has also helped boost the FTSE 100 companies in sectors like oil production and basic materials.
Before you switch off for the day:
US jobs growth rebounded in January, with 517,000 new positions added, nearly double the revised December figure of 260,000, and outpacing economist predictions of 185,000. The unemployment rate fell to a historic low of 3.4%. The robust jobs data has prompted a sell-off in US government debt, with the two-year Treasury yield rising 0.14% to 4.23% and the 10-year yield rising 0.1% to 3.5%, amid expectations of rising interest rates. The S&P 500 was down 0.8% during early trading in New York on Friday. The Fed has returned to a slower pace of interest rate increases after a series of big moves last year, increasing the federal funds rate by a quarter of a percentage point to 4.50% to 4.75%. Fed chair Jay Powell said that while the disinflationary process has begun, price pressures remain too intense, particularly linked to the extremely tight labour market.
Disclaimer: The information contained in this article is based on publicly available data and is for informational purposes only. It should not be considered as financial advice and does not guarantee any results. Readers should conduct their own research and seek professional advice before making any financial decisions
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