Major U.S. index futures point to a potential downturn at the start of trading today, following a fluctuating trading session the day before. This comes as traders potentially seek to benefit from recent market positivity, especially anticipating the release of consumer price inflation figures on Thursday.
The Federal Reserve is said to prefer these inflation figures, as they are predicted to indicate a slowdown in the yearly consumer price growth rate to 2.4% in January, compared to 2.6% in December. Excluding food and energy prices, the core annual consumer price growth rate is also projected to decrease from 2.9% in December to 2.8% in January. These figures could have a significant impact on interest rate expectations, as Federal Reserve officials have stated they need greater assurance of inflation deceleration before considering interest rate cuts.
Revised data from the Commerce Department released this morning suggests that the U.S. economy's growth for the fourth quarter of 2023 was slightly less than initially estimated. This shows that real gross domestic product (GDP) in the fourth quarter was revised downwards to 3.2%, compared to the previously reported 3.3%. Meanwhile, the increase in consumer prices for the fourth quarter was revised upwards from 1.7% to 1.8%, with the core price increase adjusted upwards from 2.0% to 2.1%.
Stocks displayed a lack of direction during the trading day of Tuesday, with the major averages fluctuating around the neutral line before closing mixed. Although the Nasdaq experienced a slight climb and the S&P 500 showed a minimal advance, the Dow dipped slightly.
An uncertain near-term market outlook contributed to this unsettled trading, following recent record highs for the Dow and S&P 500. Traders also kept a distance from the market in anticipation of essential economic data to the likes of the inflation readings. A report from the Commerce Department indicated a substantial decrease in new orders for U.S. manufactured durable goods in January.
Meanwhile, the Conference Board's report reveals unexpected deterioration in U.S. consumer confidence for February. Despite this, some sectors like airline stocks, utilities stocks, banking, steel and biotechnology saw significant growth, while gold stocks fell despite a minor increase in gold prices.
In commodity and currency markets, crude oil futures are marginally downturned, whereas an ounce of gold has decreased slightly. The U.S. dollar is trading higher against the yen but lower against the euro.
Asian stocks on Wednesday were mixed due to concerns over rate cuts and investor anticipation for inflation data from the U.S. and Eurozone, along with Chinese PMI data.In the U.S., the dollar index weakened due to soft demand for durable goods and consumer confidence data. Simultaneously, oil and gold prices experienced a slight decrease in Asian trading.
Many public figures in the Federal Reserve have warned against making too hasty decisions about lowering U.S. interest rates. This has led to heightened anticipation for the release of the principal PCE price index data set for Thursday.
Chinese markets are facing manipulations due to rising concerns over its ‘under stress’ property market. An important marker of this was the significant drop of 1.9 percent to 2,957.85 in the benchmark Shanghai Composite Index. This was chiefly due to Country Garden Holdings wrestling with a liquidation petition in a Hong Kong court for failure to repay a loan worth 200 million USD (HK$1.6 billion).
The stock of the beleaguered developer fell dramatically by 12.5 percent in Hong Kong, pulling the Hang Seng Index down by 1.5 percent to close at 16,536.85.
In stark contrast to Chinese stocks, Japanese shares saw very little variation as investors capitalized on recent major gains. Speculations regarding BOJ’s policy shift caused the Nikkei 225 Index to finish insignificantly lower at 39,208.03. The broader Topix Index marginally dipped by 0.1 percent to 2,674.95.
Meanwhile, Seoul stocks recovered after experiencing losses for two sessions straight. The market watchdog chief warned that companies may face penalties if they don’t work towards improving shareholder returns in the long run. This news buoyed The Kospi to a gain of 1.0 percent to end at 2,652.29.
Despite the ongoing buoyancy in the mining sector after a surge in overnight iron ore prices, Australian markets finished slightly lower. This was due to data indicating that inflation remained at a two-year low in January. This decrease in financials, shadowed the gains in the mining sector. Over the Tasman Sea, the Reserve Bank of New Zealand’s decision to maintain a steady cash rate of 5.5 percent and a reduced peak for rates forecast caused the country's benchmark S&P/NZX 50 Index to rise by 0.6 percent to 11,763.32.
European markets showed mixed responses on Wednesday as investors awaited key U.S. and Eurozone inflation readings and Chinese PMI data. Eurozone's economic confidence figures reached their lowest in three months, indicating a nearing recession. Meanwhile, mixed behavior was observed in major indices with German DAX Index, the French CAC 40 Index and the U.K.'s FTSE 100 Index showing minor fluctuations.
A variety of companies experienced notable movements in their stock performance. Some of them faced drop due to lower than expected projected revenue, reporting a net loss, trimming profit forecast, pushing back plans, or reporting a full-year loss. However, some experienced rise due to talks about a cash sale of its branch or reporting an increase in full year after tax profits.
Lastly, according to revised Commerce Department data the overall U.S. economic growth for the fourth quarter of 2023 saw a slight downward revision to 3.2 percent.The growth of the economy was a bit slower than initially estimated, following reductions made in private inventory investment, federal government expenditure, and a rise in imports, which subtract from the GDP calculation.
In contrast, the report presented enhanced adjustments to state and local government expenditure, consumer spending, residential and nonresidential fixed investments, and exports.
The Energy Information Administration is set to release its oil inventory report, which ended on February 23rd, at 10:30 am ET. Following the previous week's increase of 3.5 million barrels, crude oil inventories are predicted to hike by 1.8 million barrels.
At 12 pm ET, Raphael Bostic, the Atlanta Federal Reserve President, will discuss the monetary policy and the economy at the Greater North Fulton Chamber of Commerce.
Simultaneously, at 12:15 pm ET, Susan Collins, the Boston Federal Reserve President, will speak and participate in a fireside chat at an event organized by the Center for Business, Government, and Society at Dartmouth College's Tuck School of Business.
John Williams, the New York Federal Reserve President, will participate in a hybrid economic briefing arranged by the Long Island Association at 12:45 pm ET.
