Moving markets today: Asia markets calm despite Wall Street record; oil prices surge, bitcoin rises; focus shifts to UK GDP figures
The S&P 500 achieved a new all-time high, even as recent US inflation data revealed that price pressures were not easing as quickly as anticipated by Wall Street. Asian markets remained subdued in early trading after witnessing the record-breaking performance on Wall Street. Toyota made headlines by announcing the largest salary increase for its factory workers in 25 years. The prospect of a Federal Reserve interest-rate cut before June seems increasingly unlikely due to two consecutive months of stronger-than-expected inflation. Oil prices climbed on the back of expectations for robust global demand. Attention now shifts to the release of the UK’s GDP figures following the notable surge in the FTSE 100 index earlier in the week. Here are five key takeaways for your day.
Hot US inflation dampens hope for pre-June rate cut
U.S. consumer prices surged by 3.2 per cent year-over-year in February, driven by notable increases in gasoline and shelter costs, surpassing January’s 3.1 per cent rise. This sharp uptick in inflation has dimmed hopes for a Federal Reserve interest rate cut before June. Core inflation, which excludes volatile gas and food prices, remained persistently high. Consequently, the Fed is expected to uphold its policy rate between 5.25 per cent and 5.5 per cent next week, maintaining the status quo since July last year. Traders view the likelihood of a rate cut in May and July as slim, with June being the favoured month, carrying approximately a 70 per cent probability.
Toyota announces largest salary increase in 25 years for factory workers
Toyota Motor reached an agreement to provide its factory workers with their largest pay raise in 25 years, Reuters reported. This move has raised expectations that substantial salary increases across various industries will give the central bank flexibility to implement a significant policy change next week. Alongside Toyota, companies like Panasonic and Nissan, as well as other major players in Japan Inc, have announced their full compliance with union demands for wage hikes during the annual negotiations, which concluded on Wednesday. These yearly discussions, known for fostering a cooperative relationship between Japanese management and labor, are drawing increased attention this year. The anticipated wage increases are seen as paving the way for the central bank to potentially end its longstanding policy of negative interest rates as early as next week.
Oil prices soar on back of strong demand
Oil prices rose due to strong global demand expectations, particularly from the United States, Reuters reported. Brent futures for May delivery increased to $82.37 per barrel, and the April U.S. West Texas Intermediate (WTI) crude contract rose to $78.02. OPEC maintained its forecast of robust oil demand growth globally. U.S. crude oil and fuel inventories fell last week, indicating healthy demand.
What’s coming up
Now, all eyes are on the upcoming release of the UK’s GDP figures, following the notable surge in the FTSE 100 index on Tuesday. These figures, set to be published early morning, will offer insights into whether the UK economy is rebounding from recession after experiencing two consecutive quarters of decline at the close of 2023. Economists anticipate a 0.2 percent increase in GDP for January.
In addition, attention is turning to U.S. retail sales, seen as a key indicator of consumer spending, which has shown resilience thus far. Also on the radar are the forthcoming producer price reports later in the week.
Asian markets cautious despite S&P 500 hits historic highs
The main stock index in New York rose by 1.1 per cent, led by tech stocks driving the Nasdaq Composite up 1.5 per cent, marking the largest single-day gains since February 22. Nvidia surged 7 per cent, standing out among the “Magnificent Seven” stocks. In Asia, Hong Kong’s Hang Seng index increased by 0.2 per cent after a notable 3 per cent rise the previous day, while Mainland China’s CSI 300 fell by 0.2 per cent. The dollar remained stable at 102.91, but the Japanese yen strengthened against it to JPY 147.34. Gold prices rose modestly by 0.13 per cent to $2159.9 per ounce. Bitcoin increased by 0.71 per cent to $71,991.00, and Ether rose by 1.67 per cent to $4,017, remaining close to its previous peak.