Written by: Susannah Streeter | Hargreaves Lansdown
- World Bank warns about knock-on effect of geopolitical tensions for global growth.
- Tech stocks flex muscle despite concerns about slowing global economy, pushing up Nikkei to fresh peaks.
- Brent Crude rises, hovering around $78 a barrel, on concerns Israel-Gaza crisis will escalate.
- Boeing attempts damage limitation after 737 Max 9 incident.
- Bitcoin volatility surges amid fake post on regulation.
- Retailers scramble to secure stock amid shipping delays.
- Sainsbury’s updates the market on festive sales.
Negative sentiment has descended about the prospects for the global economy after warnings from the World Bank about the knock-on effect of conflict in the Middle East. Tech stocks are still showing considerable muscle, with investors expecting that demand for AI innovations won’t subside considerably, even as growth slows. The Nasdaq clung onto positive territory, and heady valuations of tech superstars still remain intact. The tech bandwagon has pulled the Nikkei up to fresh highs, with chip related stocks gaining new ground.
FTSE 100 set to open lower amid World Bank warning on growth
With the World Bank forecasting that geo-political crises will drag global growth back to the slowest pace since the pandemic, there is little momentum for the internationally focused FTSE 100. The Bank is forecasting that trade and investment will also be stifled by conflict. Although oil has ticked back up with supply issues rearing up again amid fears the Gaza-Israel war will escalate, metals prices have largely fallen back, putting pressure on mining stocks.
Boeing attempts damage limitation
Boeing’s executives are in damage limitation mode as the aerospace giant grapples with the continuing fall-out of the grounding of 171 aircraft. CEO has vowed that the company would ensure the panel blowout on the 737 Max 9 jet ‘can never happen again.’ The problem is that its far from an isolated incident for its family of small jets and the fatal crashes in Ethiopia and Indonesia are a stain on the company’s reputation. The CEO is reacted with comparative speed in acknowledging errors this time around, but its going to take considerable time to build back up confidence, particularly with customers like Ryanair calling on the company to improve its quality control.
Bitcoin turns more volatile after fake regulatory post.
The pump and dump effect of crypto scams has come into sharp focus, after wild swings in Bitcoin. Fans have been holding out for regulatory approval of spot Bitcoin exchange traded funds, and fraudsters have clearly used this desire for legitimacy to again cheat the system. Hackers accessed the SEC account on X and posted about approval. This sent Bitcoin shooting up 2.5% in value as holders celebrated, before it crashed back down by around 6% as regulators revealed it was fake. Still, Bitcoin remains at two-year highs as official approval is still expected to be granted for the first wave of ETFs. However, Investors should be wary of trying to catch a ride on crypto solely on these moments of momentum, particularly given the highly volatile journey that crypto has been on. The events of the past 24 hours also should serve as a warning that fraudsters operating pump and dump schemes are numerous in the crypto wild west and speculators can get their fingers badly burned. Globally it’s still far from clear what the regulatory landscape will look like and anyone considering speculating in crypto should still proceed with caution, use money they can afford to lose, and only dabble at the fringes of their well-diversified portfolios.
Retailers scramble to deal with delays.
The scramble is on among retailers to stock up Spring collections amid severe disruption caused the ongoing conflict in the Middle East. The attacks by Houthi rebels in the Red Sea have impeded the passage of nearly 20% of global shipping, causing huge diversions and delays and increasing the cost of moving goods. With major operators like Maersk and Hapag-Lloyd continuing to re-route ships, there are risks that retailers may be forced to delay introductions of new ranges if they can’t rely on timely deliveries. The potential for fresh snarl ups in supply chains are dealing another difficult hand to retailers, who are also grappling with demand worries given continuing cost-of-living headwinds. With interest rates set to stay elevated, amid a highly uncertain economic outlook, the concern is that shoppers will turn more frugal in the months to come.''
Sainsbury’s updates the market on festive sales.
Sainsburys is having a happy new year. Grocery items flew off the shelves in the crucial festive trading season – but this isn’t a case of the Christmas tide lifting all ships. The supermarket giant has put in an enormous amount of work to improve its pricing and product propositions, and this has allowed it to hit the consumer sweet spot. Crucially, the number of items being bought is proving resilient, so sales momentum isn’t purely being driven by prices. Convincing shoppers to put extra goodies in the basket is crucial as inflation starts to temper.
More broadly, consumers are appearing more resilient too, as shown by a preference for more expensive Taste the Difference ranges and a trend of treating ourselves at home. Sadly this resilience isn’t infinite and isn’t being felt in the more discretionary corners of the market, hindering progress in general merchandise and clothing.
Related: Wariness Returns Amid Middle East Tension and Inflation Uncertainty