Global markets news round-up to start your day: 09/02/23

Ukrainian President Volodymyr Zelenskiy made a surprise visit to the UK, only his second confirmed trip outside Ukraine since the war began. During his visit, Rishi Sunak, the UK Chancellor of the Exchequer, announced further training for Ukrainian troops and new help for fighter pilots. Zelenskiy also addressed lawmakers and will meet King Charles. 

Meanwhile, Microsoft’s proposed acquisition of Activision has been warned by the antitrust watchdog in the UK, claiming it will harm competition in the UK gaming market. Microsoft may be required to sell the Call of Duty franchise in order to receive approval. 

Credit Suisse is also in the news as it plans to grant its top executives 350 million Swiss francs worth of awards, which will pay out if its restructuring is successful. 

Meanwhile, shares of Man Utd surged after reports that Qatari investors plan to make a bid in the coming days. 

The UK economy has been hit by the biggest loss of purchasing power since the 1970s oil crisis, with energy prices rising dramatically. The financial regulator in the UK has praised high-frequency traders, known as “Flash Boys,” as they are better at handling increased volatility than banks and contribute the most information that helps set exchange rates. 

The aftermath of the twin earthquakes in Turkey and Syria has resulted in a death toll of over 11,000, with thousands more trapped in damaged buildings. Turkish President Erdogan has promised a massive reconstruction effort, but the scale of the catastrophe remains unknown.

Investors have reduced their bearish bets on the market by $300 billion, moving closer to a neutral position after the Federal Reserve warned that its inflation-fighting battle is far from over. The shift has taken investors from underweight to holding equities closer to the average of the past decade, as the S&P 500 surged from its bear-market low in mid-October. However, most managers are still wary of another market selloff due to the risk of a recession stoking by hawkish central bankers. The new-year surge has forced many investors to cover bearish positions and has pushed the Nasdaq 100 to the verge of a bull market. Markets are convinced in a Fed pivot to easier policy, despite the robust labor gains and reduced chances of recession. Despite this, many on Wall Street are warning that the new-year enthusiasm may be overdone and will flame out, similar to the 2022 bear-market rallies. Meanwhile, individual investors have returned to buying after a year of depressed activity.

Markets yesterday:

US and European stock futures saw a slight increase while Asian equity benchmarks experienced fluctuations. 

Chinese shares recovered after opening lower, Japanese benchmarks had inconsistent positive performance, and Australian stocks dropped. 

This mixed sentiment was caused by a downturn in the Wall Street the previous day, where comments from Federal Reserve officials prompted investors to reassess their expectations about the peak rates in the US. This resulted in a 1.1% drop in the S&P 500 and a 1.8% decrease in the tech-heavy Nasdaq 100. 

However, Treasury 10-year notes saw gains from Wednesday’s rally and the Australian and New Zealand dollars strengthened. On the other hand, the dollar weakened and the yen remained unchanged.

Four Fed officials spoke at separate events on Wednesday and reinforced a shared message that the battle against inflation is far from over. This caused the Fed-funds futures markets to price in higher rates, with some options traders betting that the US policy benchmark will reach 6%. The Fed Bank of New York President, John Williams, stated that the prior Fed indications of a 5.1% increase in rates remain accurate. 

This shift in risk sentiment affected the shares of Alphabet Inc., which dropped 7.7% as investors showed concern about its new AI chatbot’s accuracy. On the other hand, Walt Disney Co. saw a surge in after-hours trading following fourth-quarter earnings that exceeded estimates, but also unveiled a dramatic restructuring that includes cutting 7,000 jobs as part of a $5.5 billion cost-cutting plan.

Adani Enterprises saw a 10% drop after MSCI Inc. said it was reviewing the number of Adani Group-linked shares that were freely tradable in public markets. 

Turkey’s stock exchange suspended trading for the first time in 24 years following a selloff that erased billions of dollars from the value of its main equities index due to two devastating earthquakes. Trading in Turkish equities, futures, and option contracts will resume on February 15th. 

Meanwhile, oil steadied during Asian trading after rallying 7% over the previous three sessions, and gold remained unchanged. 

The chief investment officer of equities at Federated Hermes, Stephen Auth, stated that market volatility is expected to persist as news on earnings, inflation, the economy, and the Fed continues to alternate between bullish and bearish.

Global indices at 6am UKT:

Dow Jones: 33,949.01 (-0.61%)

NASDAQ: 11,910.52 (-1.68%)

FTSE100: 7,885.17 (+0.26%)

CAC40: 7,119.83 (-0.18%)

Sensex: 60,718.50 (+0.09%)

Nifty50: 17,867.10 (-0.03%)

Nikkei225: 27,619.41 (+0.05%)

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