Moving markets today: Asian markets reflect Wall Street’s caution, U.S. dollar weakens ahead of key data, bitcoin surpasses $57,000, Japan’s core inflation slips; All eyes on PMIs and inflation data
U.S. stocks saw minor setbacks following a recent surge fuelled by artificial intelligence, with investors now turning their attention to upcoming economic data. Meanwhile, Asian markets faced challenges. Japan’s core inflation reached its lowest level in nearly two years. Looking ahead, it’s essential to stay tuned to significant economic updates globally. This week, major economies will reveal crucial indicators such as the manufacturing Purchasing Managers’ Index (PMI) and Consumer Price Index (CPI) for February. Here are five key takeaways for your day.
Japanese inflation deceleration complicates BOJ’s negative interest rate policy exit
In Japan, core inflation slowed for the third straight month, complicating the Bank of Japan‘s interest rate plans. Official data revealed the core consumer price index rose 2.0% in January, down from 2.3% in December, marking its lowest level since March 2022 due to lower imported raw material costs. Despite optimism about hitting the 2% inflation target, recent data hasn’t supported the central bank’s move away from its loose monetary policy, especially with the economy contracting for the second consecutive quarter due to weak consumer spending.
British retail prices show weakest increase since March 2022: BRC
British shop prices experienced their slowest increase in nearly two years this month, as reported by the British Retail Consortium (BRC) on Tuesday. This trend signals a welcome easing of inflationary pressures for the Bank of England (BoE). Shop price inflation dropped to 2.5% in February from 2.9% in January, marking the smallest annual rise since March 2022, Reuters reported. The deceleration was mainly attributed to a weaker growth in food prices, which rose by 5.0% year-on-year, down from January’s 6.1% increase. Non-food prices remained steady, with a 1.3% increase, the same rate as observed in January.
Kansas City Fed’s Schmid urges caution on interest rate cuts
In his first policy speech, Jeffrey Schmid, President of the Kansas City Federal Reserve Bank, highlighted his ongoing concern about the persistent threat of high inflation. He made it clear that he’s not eager to rush into cutting interest rates, emphasizing that the battle against inflation is far from over.
Market sentiment has already shifted, with expectations for the first Federal Reserve rate cut moving from May to June, with a probability of around 70%. Futures contracts suggest a forecast of just over three quarter-point cuts for the year, a decrease from the initial expectation of five cuts at the start of the month.
What’s on the radar this week
This week, significant economic events and data releases are scheduled across various regions worldwide. On Thursday, the core Personal Consumption Expenditures (PCE) price index, closely monitored by the Federal Reserve for inflation, will be disclosed. Moreover, inflation data for the euro zone and Australia are anticipated, along with a rate decision from the Reserve Bank of New Zealand (RBNZ) and Purchasing Managers’ Index (PMI) readings in China.
Here’s a breakdown of other key events to watch for this week: Tuesday: Germany’s GfK Consumer Climate survey and US January durable goods orders data. Wednesday: Australia’s January CPI inflation rate data, Germany’s monthly retail sales figures, New Zealand’s official cash rate decision by the central bank, and US revised Q4 GDP growth figures. Thursday: China’s NBS manufacturing and non-manufacturing PMI data, Germany’s February unemployment figures, CPI and HICP inflation rate data, India’s Q3 GDP figures, and US January personal spending and PCE price index data.
Asian markets mirror Wall Street’s cautious sentiment
The Dow Jones Industrial Average slipped by 0.16% to 39,069.23 points, with the S&P 500 down 0.38% at 5,069.53 points and the Nasdaq Composite dropping 0.13% to 15,976.25 points. Alphabet, Google’s parent company, stumbled 4.44% as it announced plans to restart its AI tool after halting it last week due to inaccuracies. Warren Buffett-led Berkshire Hathaway dipped 1.94% amid worries over a potential lawsuit against its subsidiary, PacifiCorp. Domino’s Pizza soared 5.85% on strong quarterly sales, while Intuitive Machines plunged 34.62% after its lunar spacecraft tipped over post-landing.
In Asian markets, Japan’s Topix index rose by 0.5%, while the export-focused Nikkei 225 gained 0.3%. The Hang Seng index in Hong Kong remained stable, while mainland China’s CSI 300 index advanced by 0.2% in early trading. South Korea’s Kospi index experienced a slight decline of 0.1%. Ten-year U.S. Treasury yields decreased by 2 basis points to 4.27%, while two-year yields fell by four basis points to 4.70%. Brent crude futures remained within recent levels, trading at $82.52 per barrel.