Global Markets News Round-up: 21/02/23

HSBC has said it will consider a special dividend and accelerated buybacks after beating consensus with quarterly pre-tax profit of $6.83bn. It also said it has accelerated restructuring in the US and Europe and may book an extra $300m for severance costs this year. HSBC CEO Noel Quinn said the bank is “on track to deliver higher returns in 2023”. The lender has trimmed its 2022 bonus pool to $3.36bn from $3.5bn. 

The British government has been told by the Resolution Foundation to consider rolling back pension freedoms and tax breaks that are contributing to the UK’s low labour participation rate. 

Meanwhile, BofA and JPMorgan are betting the European stock rally will fizzle.

Turkey was hit by two earthquakes on 21 February, measuring 6.4 and 5.8 in magnitude, leaving three people dead and 213 taken to the hospital. It was reported that the quakes also caused injuries in neighbouring Syria. Two weeks earlier, two major tremors in the same area had left tens of thousands of people dead. Recep Tayyip Erdogan announced plans to begin building almost 200,000 homes as early as March. 

President Biden arrived in Ukraine under tight security following months of preparation by his advisers. The president visited the country to show support for Ukraine amid fears of further Russian aggression. 

The UK Prime Minister, Rishi Sunak, began to rally support from Conservative rebels for a post-Brexit deal on Northern Ireland after weeks of talks with the European Union. 

BHP Group said it was optimistic about a demand recovery in China, following the end of the Covid zero policies. The miner is hopeful that China will turn from a drag on its earnings to a driver this year. The Asian nation’s slowdown hit buying of iron ore, copper and coal, which are BHP’s main sources of revenue, in the second half, while accelerating inflation in other major economies didn’t help. 

European shares are expected to open on a muted note, as traders are reassessing the policy outlook for central banks. 

Expected data include PMIs from France, Germany and the UK.

Markets yesterday:

US and European equity futures fell, along with Asian stocks, as investors considered central banks tightening policy to curb inflation. 

The contracts for the Nasdaq 100 and S&P 500 both lost over 0.3%, with losses expected for US stocks after declines last week. 

The MSCI Asia Pacific Index was down 0.7% in mixed trading, with the Hang Seng index dropping, while Japanese shares fluctuated between gains and losses. 

HSBC Holdings’ shares fell, despite the bank exceeding profit predictions in Q4 results. 

Mainland China stocks fluctuated after the CSI 300 benchmark experienced its highest one-day gain since November, following Goldman Sachs Group’s declaration that the nation’s equities may increase by approximately a fifth from current levels this year. 

The Japanese 10-year yield exceeded the central bank’s 0.5% yield curve control target for the first time since January. 

The dollar rose, advancing against peers in the Group-of-10 currency basket, with Treasury yields increasing in Asia following a US holiday on 20 February. 

On the other hand, gold remained largely unchanged, and trading for oil was irregular as investors considered improving demand from China against further monetary tightening. 

Essex Financial Services CEO, Chuck Cumello, said that economic data released thus far “certainly puts a lot of cold water” on the argument that the Federal Reserve may pause or even cut rates soon. “We’re in for a more volatile ride, and I think the market is finally waking up to rates are going to stay higher for longer,” he said.

Global indices at 6:45am UKT:

Dow Jones: 33,826.69 (+0.39%)

NASDAQ: 11,787.27 (-0.28%)

FTSE100: 8,014.31 (+0.12%)

CAC40: 7,335.61 (-0.16%)

Sensex: 60,873.39 (+0.30%)

Nifty50: 17,875.45 (+0.17%)

Nikkei225: 27,473.10 (-0.21%)

Disclaimer: The information provided in this summary is based on sources believed to be reliable and accurate. However, the accuracy and completeness of the information cannot be guaranteed. The opinions and views expressed in this summary are for informational purposes only and do not constitute investment advice. This summary should not be relied upon as the sole source of information when making investment decisions. Any decisions made based on information contained in this summary are the sole responsibility of the reader and may not be in the reader's best interest. The author and publisher assume no liability for any errors or omissions in this summary.
MSc Finance graduate from the London School of Economics and Political Science (LSE)
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Ria V Vaghela is an M&A Executive at RSM UK and an MSc Finance graduate from the London School of Economics and Political Science (LSE). She has worked at Jefferies, Dial Partners and 7i Capital prior to RSM UK gaining an experience of about 1.5 years. She has also worked as an Editor and Content Writer for The Representative Media. Apart from finance, she is interested in reading books on psychology and economics and also likes to paint and play lawn tennis

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