Global Markets News Round-up: 22/02/23

China’s top diplomat Wang Yi reaffirmed the strong relationship between China and Russia during a meeting with Russian Security Council Secretary Nikolai Patrushev, showing China’s commitment to its diplomatic partner despite portraying itself as a neutral broker in the Ukraine conflict. 

McKinsey, one of the world’s largest consulting firms, is reportedly planning to cut around 2,000 jobs, mainly in support roles, as part of a plan to preserve the compensation pool for its partners. 

The European Union has successfully reduced its gas demand this winter by almost a fifth, beating its voluntary 15% goal, which was aimed at surviving the heating season with lower Russian gas flows. 

Gold prices could remain stagnant around $1,800 for the remainder of the year if central banks, particularly China, continue to provide support for the metal at that level, despite outflows from exchange-traded funds.

The Reserve Bank of New Zealand (RBNZ) raised its cash rate by 50 basis points to 4.75%, but slowed its pace of hikes. The bank reiterated its projection that rates will peak at 5.5%, but indicated that rates may only start to fall in Q3 2024. ANZ described the bank’s overall tone as hawkish. 

Meanwhile, minutes from the Federal Reserve’s latest meeting could reveal how many policymakers were in favour of a larger rate hike. Market participants now anticipate that the US central bank will extend its tightening cycle, with rates peaking at 5.35% in 2023. 

An analysis by Danfoss Energy found that excess heat produced by industries and transportation systems in Europe could save consumers over €67bn annually by 2050, which amounts to 2,860 terawatt-hours. In urban areas, the surplus heat would be transferred to a district network to warm a central water source for heating nearby buildings. The waste in Greater London, for example, amounts to 9.5 TWh per year, enough to warm 790,000 households if recaptured. 

Microsoft has said that its $69bn acquisition of Activision Blizzard has no clear path to completion without the Call of Duty game, adding that it isn’t “feasible or realistic” to separate one game from the rest. 

Finally, the German Ifo expectations gauge is expected to have risen to 88.4 in February from 86.4 in January, benefiting from unusually mild weather and the easing of supply chain constraints.

Markets yesterday:

Equity futures in Europe fell alongside shares in Asia as investors priced in higher interest rates following the worst day in two months for US stocks. 

Contracts for the Euro Stoxx 50 index edged lower while shares in Australia, Japan, and mainland China also fell. Hong Kong’s Hang Seng Index fluctuated after falling earlier in the day to levels that would mark a 10% correction from its late-January high. 

US futures were up marginally after the S&P 500 tumbled 2% on Tuesday, in a decline that touched all major sectors, while the tech-heavy Nasdaq 100 dropped 2.4%. Weak forecasts from US retailing bellwethers added to the negative tone.

The benchmark 10-year Treasury yield slipped slightly after rising 14 basis points on Tuesday, and Australian yields trimmed their gains after weaker-than-expected wages growth data, which also weighed on the Australian dollar. 

The yield on 10-year Japanese government debt touched 0.505%, breaching the Bank of Japan’s threshold for a second day, as traders prepared to hear from the new central bank governor nominee.

The rocky geopolitical outlook also did not help. President Vladimir Putin said Russia would suspend its observation of the New START nuclear weapons treaty with the US, a decision Secretary of State Antony Blinken called “irresponsible”. President Joe Biden hit back at Putin, saying he would never win his war in Ukraine. The White House would be open to sanctioning Chinese companies that support Russia’s invasion of Ukraine, Deputy Treasury Secretary Wally Adeyemo said. 

The price of Brent crude fell to extend a Tuesday drop that has curtailed a recent rally driven by expectations of growing Chinese demand. 

In Hong Kong, officials said the stock exchange was exploring arrangements to allow continuous trading through severe weather.

Global indices at 6:45am UKT:

Dow Jones: 33,129.59 (-2.06%)

NASDAQ: 11,492.30 (-2.50%)

FTSE100: 7.977.75 (-0.46%)

CAC40: 7,308.65 (-0.37%)

Sensex: 60,089.82 (-0.96%)

Nifty50: 17,655.35 (-0.96%)

Nikkei225: 27,104.32 (-1.34%)

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