Tech Stocks Surge
S&P and Dow futures rose 0.1%. Nasdaq 100 futures (NDX:IND) fell 0.1%.
After optimistic consumer price index inflation statistics, markets will examine if key U.S. technology firms can help Wall Street overcome fears about higher-for-longer interest rates. Gold prices retreated from record highs after the reading, pending further U.S. inflation data coming this week.
CPI exceeds estimates; PPI, retail sales await.
February CPI statistics indicated inflation was stickier than predicted and well over the Fed’s 2% objective. Several Fed members cautioned that sticky inflation will prevent early rate cuts.
The CME Fedwatch tool showed that traders mostly wagered that the Fed will decrease rates by June 2024.
On Thursday, producer price index and retail sales figures will follow Tuesday’s CPI. The figures will be scrutinized for U.S. inflation clues and consumer spending resiliency, which normally supports inflation.
Wall Street was unfazed by the high CPI.
Inventory drop, OPEC outlook boost oil prices
Industry data indicating unusually low U.S. stocks in the week to March 8 boosted oil prices up 0.4% in early New York trade Wednesday. Compared to forecasts for a 0.4 million barrel gain, API crude stocks fell by 5.5 million barrels.
Official inventory data, due Wednesday, typically matches API data.
In a monthly report issued on Tuesday, OPEC reaffirmed its expectation on increased crude demand in 2024 and 2025, boosting oil market confidence.
Despite Wednesday’s advances, Brent and WTI prices were within a two-week $75–$85 barrel trading range.
A rise in U.S. crude output, already at a record 13 million barrels per day, also slowed oil advances.
Oil markets also watched the International Energy Administration’s monthly report this week.
CPI data lowers gold prices from record highs
Tuesday’s CPI report affected metal markets significantly, especially after gold prices melted up last week.
Yellow metal spot prices fell 2% this week from a record high above $2,200 an ounce to mid-to-high $2,150s.
Other precious metals fell marginally on Wednesday. Metal markets were anticipating crucial data releases later in the week for U.S. interest rate indications.
 Japanese equities lose further amid BOJ turn
On Wednesday, Japan’s Nikkei 225 and TOPIX indices tumbled from record highs.
Markets watched pay discussions between big Japanese firms and labor unions, expecting the Bank of Japan to react hawkishly to any large salary increases.
Toyota Motor Corp (NYSE:TM) (TYO:7203), one of Japan’s largest employers, agreed to a large salary hike this year, according to early reports. Stock declined roughly 1%.
Higher salaries are a vital factor for the BOJ to phase out its zero interest rates and yield curve management policies, which had driven a phenomenal surge in Japanese markets over the last year.
The BOJ is anticipated to indicate or cease its ultra-dovish policy next week or in late April.
Economic Calendar
7:00 MBA Mortgage Applications
10:00 Quarterly Services Survey
10:30 EIA Petroleum Inventories
1:00 PM Results of $22B, 30-Year Bond Auction
Other Key Events:
- Barclay’s Global Healthcare Conference, 3/12-3/14, in Miami, FL
- Deutsche Bank 32nd Annual Media, Internet & Telecom Conference, 3/11-3/13, in Palm Beach, FL
- JP Morgan Industrials Conference, 3/11-3/14, in New York
- Oppenheimer 34th Annual Healthcare MedTech & Services Conference, 3/12-3/13
- UBS Technology, Media & Internet Conference, 3/12-3/13, in London
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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.