Market insights: Five forces impacting FTSE 100 today

Moving markets today: Asia markets slips, China escapes deflation, bitcoin briefly hits $70,000; All eyes on UK GDP and U.S. inflation 

Asian stock markets faced challenges, while concerns lingered over the stability of the dollar ahead of the release of the U.S. inflation data, which could influence global interest rate adjustments. Bitcoin briefly soared to a new peak surpassing $70,000 on Friday. China saw a turnaround from deflation as consumer prices rose for the first time in six months in February. According to sources cited by Reuters, the Bank of Japan (BOJ) is considering ending negative interest rates in March. Economic highlights for the week include updates on the UK’s gross domestic product (GDP) and the January jobs report, as well as inflation data from the US, India, and various European nations. Here are five key takeaways for your day. 

China escapes deflation as consumer prices climb 

Consumer prices in China increased in February for the first time in six months due to Lunar New Year spending, offering some relief to the economy. However, factory prices continued to decline. According to the National Bureau of Statistics (NBS), the consumer price index (CPI) rose by 0.7% year-on-year, driven by higher prices for essential items like pork and fresh vegetables, as well as increased travel during the Lunar New Year festivities. This contrasted with January’s 0.8% decline, attributed to higher spending during the earlier Lunar New Year in January 2023. 

BOJ inclined to exit negative rates this month, Reuters sources say 

More Bank of Japan policymakers are considering ending negative interest rates this month due to expected hefty pay hikes in annual wage negotiations. The central bank might also revise its stimulus program, including bond yield control and asset purchases. However, consensus is lacking among the nine-member board on whether to act in the upcoming March 18-19 meeting or wait until April 25-26, according to Reuters sources. 

Japan’s revised gross domestic product (GDP) for the October-December period showed growth at an annualized rate of 0.4%, according to the Cabinet Office. This growth surpasses the initial prediction of a 0.4% contraction, thus averting a technical recession. On a quarter-on-quarter basis, the GDP increased by 0.1%, which contrasts with the initial report indicating a 0.1% decline and a median forecast of a 0.3% rise. 

UK labour market momentum dips in February: REC 

The British labour market experienced a sharp slowdown in February, according to a survey by the Recruitment and Employment Confederation (REC) and KPMG, Reuters reported. The index measuring demand for staff fell to 46.9 from January’s 49.4, marking the largest drop since the early 2021 lockdown. Permanent staff hiring decreased significantly, and billings for temporary staff declined at the fastest rate since July 2020. 

Key highlights to watch this week 

This week’s economic schedule is packed with significant updates. We anticipate the latest gross domestic product (GDP) reports from the UK, alongside January’s job figures. Furthermore, inflation data from the US, India, and various European countries will be disclosed. Both OPEC and IEA are set to release their monthly reports on the oil industry. Keep an eye on the Financial Policy Committee’s quarterly meeting, which includes prominent figures like Bank of England governor Andrew Bailey, scheduled for Tuesday. 

As we approach the end of the current earnings season, specific sectors will be in focus. Expect insights into German automakers such as Volkswagen, Mercedes-Benz, and Porsche, as well as online disruptors like Deliveroo, Moonpig, and HelloFresh. Additionally, attention will be on iconic British retailer John Lewis and the renowned plastic brick giant, Lego, the FT reported. 

Asia markets retreat; bitcoin briefly touches $70,000 threshold 

Japan’s Nikkei 225 index fell by 2.3% after reaching multiple record highs last week. In contrast, China’s CSI300 blue chips saw a modest 0.2% increase, lacking strong conviction. Japan’s Topix benchmark also declined by 2% on Monday morning, showing a trend of correlation with US markets. On the other hand, Hong Kong’s Hang Seng index rose by up to 1.4% in early trading. 

Treasury bonds continued to climb following a positive jobs report, with 10-year yields hitting a one-month low of 4.067% before settling at 4.060%. This decline in yields weakened the dollar, holding the dollar index at 102.71, close to Friday’s low of 102.33, the lowest since Jan. 15. The dollar’s slide, along with lower bond yields, boosted non-yielding assets like gold, which reached $2,178.18 an ounce, marking a 4.5% increase last week to hit record highs. However, oil prices faced challenges due to worries about China’s demand despite OPEC+ supply cuts. Brent dropped by 63 cents to $81.45 a barrel, while U.S. crude lost 64 cents to $77.37 per barrel. Additionally, the leading cryptocurrency, bitcoin, briefly surpassed the $70,000 mark for the first time on Friday.