Moving markets today: US stocks close mixed, Asia markets rise; oil prices up, Asian currencies weaken; precious metals surge. investors await US inflation data and fed minutes post strong March jobs report
US stock market indices closed with mixed results, setting a subdued tone for the week ahead. Traders are closely monitoring upcoming inflation data and the release of minutes from the Federal Reserve’s March meeting, as these will impact their expectations regarding interest rates for the rest of the year. Tesla’s shares surged by 4.9 per cent after CEO Elon Musk announced plans for the company’s self-driving Robotaxi. Asian markets experienced cautious gains, while oil prices rose amid fading hopes for a ceasefire between Israel and Hamas. Most Asian currencies, including the Japanese yen, weakened against the dollar. Precious metals, particularly gold and silver, saw price increases. Looking ahead, the corporate and economic calendar for Tuesday remains light as investors anticipate the release of key consumer price data in the US during the following session. No major economic releases are scheduled in the UK. Here are five key takeaways for your day.
Fed rate cut anticipation for 2024 drops to lowest level since October
Futures traders are less optimistic about the extent of Federal Reserve interest rate cuts this year, marking the lowest level since October amid continued US economic strength, Reuters reported.
December futures contracts now suggest a reduction of around 60 basis points for the year, down from 150 basis points at the start of 2024. CME Group data indicates the probability of a 25 basis point rate cut in June has dropped to 49 per cent, from 57 per cent a week earlier.
Investor scepticism about the Fed’s ability to lower borrowing costs without sparking inflation in a strong economy has led to swift changes in rate cut expectations, despite the Fed’s projection of a 75 basis point cut this year.
Easter boosts UK retail sales to highest levels since August
An early Easter in Britain last month boosted food spending, leading to the largest increase in retail sales since August, according to the British Retail Consortium, Reuters reported.
However, dampened demand for other goods due to wet weather conditions kept overall retail growth subdued. Despite Britain’s recent economic recession, recent data suggest a slight return to growth in the first quarter of this year, with inflation pressures easing.
Total retail spending in March rose by 3.5 per cent compared to the previous year, surpassing the 1.1 per cent annual growth in February and outpacing consumer price inflation data for the first time in over two years. These figures are not seasonally adjusted and reflect the impact of Easter Sunday falling on March 31, more than a week earlier than in 2023.
Oil prices climb as hopes for Middle East peace diminish
Early in Asian trading, oil prices went up as hopes dimmed for a ceasefire deal between Israel and Hamas, which could have eased tensions in the Middle East. Brent crude futures saw a 0.21 per cent increase, reaching $90.57 per barrel, while US West Texas Intermediate (WTI) crude rose by 0.2 per cent to $86.57.
Hamas rejected an Israeli ceasefire proposal during talks in Cairo, according to a senior Hamas official. Meanwhile, Israeli Prime Minister Benjamin Netanyahu mentioned the scheduling of an invasion of Rafah, Gaza’s last refuge for displaced Palestinians, Reuters reported.
Both Israel and Hamas sent delegations to Egypt for discussions on Sunday, with mediators from Qatar and Egypt, as well as CIA Director William Burns, taking part.
Investors are becoming more optimistic about oil due to production cuts by Saudi Arabia and its OPEC+ allies amid increasing demand. Moreover, tensions between Israel and Iran have heightened, adding to the positive sentiment in oil markets.
What’s coming up
Market participants will be closely monitoring the publication of the US Consumer Price Index (CPI) for March, set to be released on Wednesday. Analysts predict that annual headline inflation is likely to rise to 3.4 per cent from February’s 3.2 per cent. Meanwhile, the core CPI, which excludes volatile food and oil prices, is expected to show a slight decrease to 3.7 per cent from the previous 3.8 per cent.
This week kicks off first-quarter earnings season, with major financial players like JPMorgan, Citi, State Street, Wells Fargo, and BlackRock slated to announce their financial results on Friday. Additionally, Boeing will disclose its first-quarter deliveries on Tuesday.
Towards the end of this week, the European Central Bank is gearing up for its monetary policy meeting. It’s widely expected that interest rates will remain unchanged, with very little chance of a rate cut on April 11. However, the market is already looking ahead to June, where a rate cut is anticipated, possibly followed by more adjustments later in the year.
Europe is experiencing a faster decline in its inflation rate compared to other regions. This has led to speculation that interest rates might drop sooner in Europe than in the US or UK.
Furthermore, due to the observance of Eid al-Fitr, several countries including Saudi Arabia will shut down their financial markets from Wednesday until the week’s end, marking the end of Ramadan.
Hong Kong stocks lead Asian rally; precious metals surge
The Dow Jones Industrial Average experienced a slight decrease of 0.03 per cent, reaching 38,892.80, while the S&P 500 saw a marginal decline of 0.04 per cent at 5,202.39, and the Nasdaq Composite showed a modest uptick of 0.03 per cent to 16,253.96. Among the 11 key sectors of the S&P 500, six ended lower, with energy stocks taking the biggest hit, while real estate saw notable gains.
Tesla’s shares received a significant boost, rising by 4.9 per cent after CEO Elon Musk announced plans to unveil the company’s self-driving Robotaxi on August 8. Additionally, stocks related to cryptocurrencies performed well, tracking the upward movement in bitcoin prices. Companies like Coinbase Global and MicroStrategy witnessed gains of 6.7 per cent and 5.1 per cent, respectively.
In Asian markets, Hong Kong’s stock market led the gains, rising by 1.1 per cent in early trading on Tuesday. The utilities sector saw the most notable increase, with Chinese company ENN Energy leading the way with a 5.8 per cent gain. However, mainland China’s CSI 300 remained relatively unchanged, dropping by 0.3 per cent.
Most Asian currencies weakened against the dollar, including the Japanese yen, which dipped by 0.06 per cent to ¥151.88, approaching the ¥152 threshold often viewed by traders as the point where government intervention becomes likely. Similarly, the offshore Chinese yuan also declined by 0.06 per cent to Rmb7.25.
The prices of precious metals, particularly gold, continued to soar, with gold hovering just below a record high of $2,342 reached on Monday. Spot gold has seen an impressive nearly 14 per cent increase in value since the beginning of the year. The price of silver reached its highest point since the middle of 2021. Additionally, platinum has also seen a significant increase in value.