Market Watch
Dow futures fell 16 points, S&P 500 futures 3 points, and Nasdaq 100 futures 20 points, all 0.1%.
Wall Street predicts a cautious trading day ahead of the Federal Reserve policy-setting meeting, influenced by Japan’s interest rate hike for the first time in two decades. Nvidia continues its developer conference, while Bitcoin experiences its largest one-day drop in two weeks.
Boj interest rates
The Bank of Japan has hiked interest rates for the first time in 17 years, marking the end of nearly a decade of ultra-loose monetary policy. The BOJ raised short-term interest rates by ten basis points to 0% and announced it will continue to purchase Japanese government bonds at a steady pace but will end the purchase of riskier exchange-traded funds and real estate investment trusts.
The Reserve Bank of Australia left interest rates unchanged, though the RBA watered down its tightening bias. The Federal Reserve’s two-day policy meeting is set to be announced on Wednesday, with the focus on its economic projections and rate cuts for the year. The Bank of England and the Swiss National Bank are also expected to keep interest rates steady. The BOE is likely to await greater clarity on wage growth before cutting interest rates, while the SNB may wait on the sidelines until the Fed and ECB start cutting interest rates in June to prevent further weakness in the Swiss franc.
Nvidia unveils new ‘superchip’
Nvidia’s annual developer conference began with CEO Jensen Huang introducing the company’s latest chip, the B200 “Blackwell”, and a new set of software tools to help developers sell AI models to companies using Nvidia technology. The chip is 30 times faster than its predecessor and is set to launch later this year. Despite the announcements, Nvidia stock fell over 1% premarket, despite a 240% surge in shares over the past 12 months. The conference will continue later Tuesday.
Bitcion Slip
Bitcoin experienced its largest one-day drop in two weeks on Tuesday, dropping over 7% at $63,145. The Federal Reserve’s policy-setting meeting on Wednesday is expected to keep interest rates unchanged, but it will also hold a press conference to discuss the economy and future Fed rates.
A hawkish tone could cause risk aversion to Bitcoin, while lower interest rates could make traditional investments less attractive, leading investors to seek higher returns elsewhere, including Bitcoin. Despite this, Bitcoin has shown a 50% gain for the year so far, as investors have piled into U.S. exchange-traded funds backed by spot bitcoin. The $150,000 level is now “now looks likely”, according to British bank Standard Chartered.
Economic Calendar
FOMC meeting begins
8:30 Housing Starts and Permits
13:00 Results of $13B, 20-Year Bond Auction
16:00 Treasury International Capital
Other Key Events:
- Bank America Global Industrials Conference, 3/19-3/21, in London
- Keybanc Midwest Industrials Bus Tour, 3/19-3/20
- NVIDIA GTC 2024, 3/18-3/21
- Piper 24th Annual Energy Conference, 3/18-3/20, in Las Vegas
- Roth MKM 36th Annual ROTH Conference, 3/17-3/19, in Dana Point, CA
- S&P Global 39th Annual World Petrochemical Conference, 3/18-3/22, in Houston, TX
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U.S. inflation data for February is expected to provide insights into the future direction of Federal Reserve monetary policy. The overall consumer price index (CPI) is expected to match the previous month’s pace of 3.1% annually, with the core CPI expected to slow to 3.7% from 3.9% in January. However, the month-on-month gauge is expected to shed light on price gains momentum.
Fed officials have made cooling inflation the main objective of interest rate hikes, which have brought borrowing costs to over two-decade highs. They suggest cuts may be coming later this year, but need more evidence that price growth is sustainablely easing back down to their 2% annualized target. Analysts at ING believe inflation is likely too hot for comfort.
U.S. inflation data for February is expected to provide insights into the future direction of Federal Reserve monetary policy. The overall consumer price index (CPI) is expected to match the previous month’s pace of 3.1% annually, with the core CPI expected to slow to 3.7% from 3.9% in January. However, the month-on-month gauge is expected to shed light on price gains momentum.
Fed officials have made cooling inflation the main objective of interest rate hikes, which have brought borrowing costs to over two-decade highs. They suggest cuts may be coming later this year, but need more evidence that price growth is sustainablely easing back down to their 2% annualized target. Analysts at ING believe inflation is likely too hot for comfort.