By Vivek Kumar
Moving markets today: Asian markets dip as Wall Street rally falters; oil prices surge, Reddit shares soar, China’s April new home prices plummet; Attention turns to Land Securities earnings and EU inflation data
US stocks took a step back from their recent record high, ending a streak of gains driven by signs of inflation easing. Asian stocks also saw a decline, uncertain about the timing of potential US rate adjustments. However, oil prices are set to climb for the week due to improving demand, while gold prices are on track for their second weekly rise, influenced by the Federal Reserve’s rate expectations. In China, new home prices in April fell at the fastest rate in over nine years, reflecting a mixed economic picture for the country. Bank of Japan Governor Ueda stated that there are no immediate plans to sell ETF holdings. Meanwhile, Reddit’s shares surged after securing a content deal with OpenAI. Investors are eagerly awaiting consumer price data for the euro area, along with speeches from multiple Fed speakers. Additionally, attention is on Land Securities (LAND), a major UK real estate company, as it prepares to release its financial results. Here are five key takeaways for your day.
China’s April economic metrics disappoint, sparking recovery worries
China saw the steepest monthly drop in new home prices in over nine years in April, despite efforts by authorities to stabilize the property market. Prices fell by 0.6 per cent from March, the sharpest decline since November 2014, marking the tenth consecutive monthly drop.
Despite these challenges, China’s industrial output surged by 6.7 per cent year-on-year in April, outpacing expectations. However, retail sales only rose by 2.3 per cent, lower than analysts’ forecasts. Fixed asset investment also fell short of expectations, expanding by 4.2 per cent in the first four months of 2024 compared to the same period last year.
BOJ Governor Ueda said no immediate plan to sell ETF holdings
Bank of Japan Governor Kazuo Ueda has said that the central bank doesn’t have any immediate plans to sell its large stash of exchange-traded funds (ETFs). This has become a topic of interest as a potential source of income to back government projects. The BOJ currently holds around 37 trillion yen worth of ETFs. Estimates from January suggest that the market value of these holdings is approximately 67 trillion yen, indicating a potential profit of around 30 trillion yen that has yet to be realized.
Reddit shares soar after content deal with OpenAI
OpenAI and Reddit have struck a deal allowing OpenAI to utilize content from Reddit’s platform for its AI chatbot. This news caused OpenAI’s shares to rise by as much as 15 per cent in after-hours trading, the FT reported.
The announcement, made on Thursday, is part of OpenAI’s ongoing efforts to secure reliable data for its powerful AI models. This collaboration adds to a series of partnerships between OpenAI, supported by Microsoft, and various media brands.
However, OpenAI is currently facing legal challenges from publishers who are reluctant to grant permission for their content to be used by OpenAI’s ChatGPT. The agreement grants OpenAI access to Reddit’s content and allows Reddit to incorporate more AI tools into its platform.
What’s coming up
Eurostat will release April’s consumer price data for the euro area, followed by several speeches from US Federal Reserve officials throughout the afternoon.
Land Securities (LAND), a leading UK real estate company, will also be in the spotlight as it announces its financial results. The company’s stock has climbed 50 per cent from its lowest point in 2022. Recently, Land Securities revealed a £400 million sale of its hotel portfolio, indicating a strategic shift toward its core strengths.
Investors are eager for more information on market rental growth, potential property sales, funding for its Southbank office projects, and future plans for urban mixed-use developments.
Asian markets decline as Wall Street rally loses steam
The Dow Jones Industrial Average dipped 0.10 per cent to 39,869.38, while the S&P 500 and Nasdaq Composite dropped 0.21 per cent and 0.26 per cent to 5,297.10 and 16,698.32, respectively. Most sectors in the S&P 500 saw declines, with consumer staples being the only sector to close with gains.
Walmart’s stock surged 7 per cent after the company raised its sales and profit outlook for fiscal 2025, anticipating that lower inflation will boost demand for essentials. Conversely, Deere’s stock fell 4.8 per cent after the company reduced its annual profit forecast for the second time.
Shares of Swiss insurer Chubb, listed in the US, rose 4.7 per cent following Warren Buffett’s Berkshire Hathaway’s announcement of a $6.7 billion investment in the company. Meanwhile, meme stocks GameStop and AMC Entertainment plunged 30 per cent and 15 per cent, respectively, extending their losses from a previous rally sparked by the return of “Roaring Kitty” Keith Gill on social media.
In Asian markets, Hong Kong stocks climbed on Friday morning ahead of the release of Chinese economic data. The Hang Seng index increased by 1.1 per cent, supported by gains in Chinese tech and property firms.
The Hang Seng Mainland Properties index surged 2.5 per cent, accumulating a 7 per cent gain for the week amid rumours that the Chinese government would purchase properties from developers. The Hang Seng Tech index also rose by 1.8 per cent. On the other hand, Japan’s Nikkei 225 declined by 0.48 per cent, while China’s CSI300 blue-chip index edged up 0.15 per cent in early trading.
In commodities, oil prices rose during Asian trading hours. Brent crude was poised for its first weekly gain in three weeks, buoyed by signs of improving global demand and slowing inflation in the US US crude increased by 0.23 per cent to $79.41 per barrel, while Brent crude went up by 0.37 per cent to $83.58 per barrel.
Gold prices were last recorded at $2,374.19 per ounce.
