Moving markets today: Asia shares quiet, US dollar resilient post-Fed Waller comments; yen intervention in focus, gold prices down; attention on US consumer confidence and UK Q4 GDP
Overnight, U.S. stocks saw an upward trend, led by the Dow and marked by the S&P 500 reaching a new record high, driven by gains in pharmaceutical giant Merck. The majority of S&P 500 stocks ended the day with gains. However, Japanese stocks experienced early losses in the Asia-Pacific region, as the yen strengthened against the dollar, possibly due to indications of potential government intervention. Global oil prices rebounded on Thursday after declining for two consecutive days. Christopher Waller, a Federal Reserve official, remains cautious about rushing to implement rate cuts in light of ongoing inflation concerns. Investors are eagerly awaiting Friday’s release of the US core PCE inflation data, which is expected to offer fresh insights into the direction of monetary policy. Here are five key takeaways for your day.
Fed’s Waller advocates patience in rate cuts amid stubborn inflation data
A prominent Federal Reserve representative has suggested delaying interest rate cuts due to “disappointing” inflation data. Christopher Waller, a Fed governor and influential figure in US interest rate decisions, stated on Wednesday that recent inflation readings have been below expectations.
He emphasized the progress made in reducing inflation over the past year but noted the recent setbacks. Waller suggested it would be prudent to either decrease the total number of rate cuts or postpone them further into the future in light of the latest inflation figures.
UK car production jumps 14.6 per cent in February
In February, car production in Britain soared by 14.6 per cent compared to the previous year, driven by strong domestic demand. However, the Society of Motor Manufacturers and Traders (SMMT) warned of potential variability in production levels ahead. Major manufacturers are shifting focus from LNG-running models to new electric variants, Reuters reported.
Despite this, a total of 79,907 units were produced, up from 69,707 units a year earlier. Domestic demand surged by 58 per cent, totalling 20,658 units. Electrified vehicle production accounted for over a third of output in February, with 29,038 units produced, slightly lower than January’s figure of 29,590 units.
Australian retail sales inch up in February, thanks to Taylor Swift concerts
Australian retail sales rose slightly in February, partly driven by popular Taylor Swift concerts boosting spending on clothing and dining out. However, annual growth remained low due to the impact of high interest rates on incomes.
Data from the Australian Bureau of Statistics showed a 0.3 per cent increase in February compared to January, below analysts’ 0.4 per cent expectation. Despite total sales reaching A$35.9 billion ($23.43 billion), yearly growth stood at just 1.6 per cent, disappointing given rapid population growth. Ben Dorber, head of retail statistics at the ABS, attributed the spending increase to the sold-out Taylor Swift shows, particularly in Sydney and Melbourne, where consumers spent more on clothing, merchandise, accessories, and dining out.
What’s on the docket
Scheduled for release on Friday, the PCE price index, which the Fed favours as a measure of inflation, coincides with the closure of the U.S. stock market for Good Friday. Any unexpected rise in inflation could potentially temper market optimism regarding the likelihood of early interest rate cuts.
Alongside this, the week also includes the final fourth-quarter GDP figures, the University of Michigan’s consumer sentiment report, and the weekly jobless claims data.
In the UK, the Office for National Statistics will unveil its own estimate for fourth-quarter GDP at 0700 GMT. It’s widely expected that the UK economy contracted by 0.3 per cent quarter-on-quarter.
Japanese stocks trim gains as yen strengthens; Asia shares mixed
The major U.S. stock indexes were set to finish the quarter with gains, particularly notable for the S&P 500, which was on track for its most significant first-quarter rise since 2019. The S&P 500 closed at 5,249.26 points, up by 0.88 per cent, while the Nasdaq Composite and the Dow Jones Industrial Average also saw gains, rising by 0.51 per cent and 1.23 per cent, respectively.
In Asia, Japan’s stock market struggled, with the Topix index dropping by 1.31 per cent, mainly due to losses in the financial sector. Meanwhile, Australia’s stock market hit a new all-time high, with the S&P/ASX 200 climbing by 0.9 per cent.
Chinese stocks showed mixed results, with the CSI300 index rising slightly by 0.17 per cent, and the Shanghai Composite index hovering just below the important 3000-point mark, gaining 0.2 per cent. Hong Kong’s Hang Seng Index also saw a modest increase of 0.20 per cent.
Currency-wise, the dollar was strong, trading around 104.329. This strength in the dollar put a pause on the recent surge in gold prices, which remained nearly unchanged at $2,194.69 per ounce. Oil prices saw a slight uptick, with Brent crude gaining 46 cents to $86.55 a barrel, and U.S. crude rising by 57 cents to $81.92 per barrel. Meanwhile, in the cryptocurrency market, Bitcoin rose by 0.49 per cent to $69,190.