Wall Street followed the FTSE 100 (^FTSE) higher on Thursday even as the number of Americans claiming unemployment benefits increased more than expected last week.
According to government figures, initial jobless claims rose to a seasonally adjusted 221,000 for the week ending on 30 March, official figures showed.
It came after comments from Federal Reserve chair Jerome Powell failed to alter the mood regarding interest rates. He expects rates will fall at some point this year, but said that policymakers need more evidence that inflation is on a sustainable path back to 2%.
Deutsche Bank reported that investors are pricing in a 64% chance of a rate cut by June, with 71 basis points of easing seen by the end of the year.
Traders will also be looking to the latest minutes from the European Central Bank’s (ECB) March meeting.
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London’s benchmark index was 0.5% higher by the end of the session, with banks and miners leading the charge
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Germany’s DAX (^GDAXI) was 0.2% higher and the CAC (^FCHI) in Paris was flat at the close
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The pan-European STOXX 600 (^STOXX) was up 0.2% during the session
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Wall Street opened higher as the US dollar ceded ground to other major currencies
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Ocado chair Rick Rick Haythornthwaite set to leave boardroom role early next year
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Moody’s cuts Thames Water debt rating
Pierre Veyret, technical analyst at ActivTrades, said: “While optimism is returning to the market, investors will cautiously monitor the next batch of data for this week, including today’s PMI and PPI data from the Eurozone and the initial jobless claims from the US.”
“In addition, several speeches from Fed officials alongside the publication of the minutes of the last ECB meeting may also bring higher market volatility throughout the day ahead of tomorrow’s US Non-Farm Payroll.”
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Live22 updates
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Number of Americans claiming unemployment benefits rise
Charlotte North Carolina,Starbucks Coffee,sign notice banner,help wanted now hiring apply online,jobs economy,Black African,ethnic ethnicity,minority, (Jeffrey Isaac Greenberg 12+) The number of Americans claiming unemployment benefits increased more than expected last week, new data has shown.
According to government figures, initial jobless claims rose to a seasonally adjusted 221,000 for the week ending on 30 March.
A Reuters poll of economists showed an average forecast of 214,000 claims.
Reuters reported:
Labour market resilience is anchoring the economy, with gross domestic product increasing at a brisk 3.4% annualized rate in the fourth quarter. Growth estimates for the first quarter are as high as a 2.8% pace.
That strength, combined with still-high inflation, could see the Federal Reserve delaying a much-anticipated interest rate cut this year.
It came as the US trade deficit in February was slightly bigger than expected, coming in at $68.9bn, this was $1.6bn more than economists had forecast.
Initial claims for the week ending March 30, 2024, indicates that the remarkable job security experienced by Americans continues into the second quarter of 2024. First time claims increased to 221,000 from an upwardly revised 212,000 during the previous week which is modestly… pic.twitter.com/46jCGztGw2
— Joseph Brusuelas (@joebrusuelas) April 4, 2024
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Bitcoin price volatile as reduction in supply looms
Bitcoin is experiencing price volatility with just over two weeks remaining before the digital asset is expected to undergo its “halving” event.
Bitcoin halving means the reward for mining bitcoin is cut in half. Halvings reduce the rate at which new coins are created and therefore lower the available amount of new supply. Bitcoin (BTC-USD) last halved on May 11, 2020, resulting in a block reward of 6.25 BTC. The next halving will bring the block reward down to 3.125 BTC.
Frantic trading in the lead up to the event has driven up the price of bitcoin, with volatility over the past 24 hours causing the digital asset to fall to $65,000 (£51,340), before subsequently recovering to currently trade slightly above $66,000 (£52,130).
Although the forthcoming bitcoin halving is expected to decrease the supply of bitcoin, potentially resulting in price appreciation, recent market trends indicate that investors may be cashing in on profits ahead of the event.
This was evidenced by a significant drop in bitcoin’s price at the beginning of the week, plummeting from nearly $70,000 (£55,290) to slightly above the $65,000 threshold.
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What’s Next for Thames Water?
Henley on Thames, Oxfordshire, UK. 28th February, 2024. Bell Street in Henley, Oxfordshire is currently closed to traffic whilst Thames Water do work on water pipes. Thames Water has reportedly been lobbying the government and water regulator OFWAT to let it increase customer bills by 40%. They are also asking to be able to pay lower fines for pollution incidents so as to try to avert a bailout by taxpayers. Credit: Maureen McLean/Alamy Live News (Maureen McLean) The UK’s largest water utility lost a much-needed lifeline to stay afloat.
On 28 March 28, Thames Water Utilities Limited (Thames Water), a provider of water and wastewater services to more than 16 million customers across London and South East England, announced that its shareholders will not be providing a planned GBP 500 million equity injection.
Absent this funding, Thames Water’s parent, Kemble Water Utilities Limited (Kemble Water), had noted in its 2023 annual report that it would be unable to meet a £190m debt maturity at the end of April, while Thames Water would only have enough liquidity to meet its day-to-day operations for up to 18 months.
Key highlights ffrom Morningstar include:
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Thames Water’s debt is substantial and, combined with penalties for missing set environmental targets, financial performance has been battered.
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If Kemble Water defaults on its debt, negative investor sentiment in the UK water business may raise sector funding costs.
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We do not, at this time, believe other UK water utilities are likely to become financially distressed as their shareholders have supported turnaround plans.
Tom Li, senior vice president, energy & natural resources of Morningstar DBRS, said:
“In the event Kemble Water defaults on its £190m debt obligation in April, investor sentiment in the UK water sector could turn negative and sector funding costs could rise.
“Furthermore, customer bills for other UK water utilities could increase materially as they have requested significant hikes to fund their proposed business plans too.”
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Profits at Co-op slide
Co-op store mural, Curzon Street, Birmingham, West Midlands, England, UK (Colin Underhill) Co-op has posted a decline in annual pre-tax profit after the sale of its petrol forecourt business, citing grocery price inflation and rainy weather affecting convenience shopping.
The group, which runs Britain’s seventh-biggest supermarket chain, said profit before tax came in at £28m ($35.4 million) for 2023, compared with £268m pounds in the preceding year.
Meanwhile, group revenue fell £200m to £11.3bn.
It ended last year with a grocery market share of 5.4%, according to researcher Kantar, down 20 basis points on the year.
Co-op is owned by its more than 5 million members, and has been grappling with intense competition from German discounters Aldi and Lidl, as well as market leaders in the country.
There was also a sharp reduction in group net debt to £82m, from £322m the prior year.
Co-op has committed to investing millions of pounds to prevent price rises at the cost of profitability.
It comes as Co-op sold its petrol forecourt estate to supermarket rival Asda for more than £600m pounds in 2022. Excluding the business, profit was up £79m pounds for the year, it said.
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Oil prices rise on lower supply concerns
Vole Au Vent Offshore supply ship Jack up rig anchored in the North sea off Blyth at sunrise with golden topped clouds and sun just above (Wilf Doyle) Oil prices rose slightly on Thursday, before paring back gains, on concerns of lower supply. It came as major producers are keeping output cuts in place and on signs of stronger economic growth in the US, the world’s biggest oil consumer.
Brent futures (BZ=F) for June rose 4 cents to $89.39 a barrel while US West Texas Intermediate (WTI) futures for May rose 2 cents to $85.45 a barrel.
On Wednesday, the Organisation of Petroleum Exporting Countries and its allies (OPEC+), decided to keep their oil supply policy unchanged. They also pressed some countries to boost compliance with output cuts.
Both the June Brent contract and the May WTI contract have risen for the past four days and closed on Wednesday at the highest since the end of October.
Analysts at ING said:
“Brent is facing some resistance at the US$90/bbl level, with it unable to break above it so far.”
Watch: How does inflation affect interest rates?
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