Moving markets today: Asian markets mixed; oil prices rebound, China’s CPI inflation eases, RBNZ keeps key rate at 5.50 per cent; focus shifts to US Fed and BOE policymakers’ speeches
The S&P 500 continued its streak of hitting new record highs for the fifth consecutive session, buoyed by slightly higher bond yields and anticipation surrounding upcoming inflation data set to be released on Thursday. In Asia, stock markets saw minor declines on Wednesday after Federal Reserve Chair Jerome Powell’s remarks offered little clarity on the timing of expected US interest rate cuts later this year. Oil prices rebounded following a three-day decline, supported by a report indicating a decrease in US crude and fuel inventories, which suggested steady demand and improved prospects for future interest rate cuts. Gold prices remained steady. Meanwhile, China reported a slowdown in consumer price increases ahead of an important party policy meeting, and New Zealand’s central bank opted to keep its cash rate unchanged at 5.5 per cent. Eurozone wage growth saw a modest uptick in June, according to reports from Indeed. Key events for the week include updates on UK GDP, earnings reports from Wall Street companies, and the release of the US consumer price index report. Federal Reserve speakers, including Governor Michelle Bowman and other top officials, remained under scrutiny for their insights. Bank of England chief economist Huw Pill and Catherine Mann also delivered notable remarks. Despite the FTSE 100 closing lower on Tuesday, futures indicated a positive start for Wednesday’s trading session.
Here are five key takeaways for your day.
China’s consumer price inflation eases before major party policy meeting
According to official data from the National Bureau of Statistics released on Wednesday, the consumer price index (CPI) rose by 0.2 per cent, marking a decrease from the 0.3 per cent rise seen in May and falling short of economists’ expectations of a 0.4 per cent increase.
Meanwhile, the producer price index (PPI) showed a decline of 0.8 per cent for the month, improving from a 1.4 per cent contraction in May. This index has been gradually stabilizing over the past three months.
New Zealand central bank holds cash rate steady
New Zealand’s central bank decided to keep its cash rate steady at 5.5 per cent. The bank expressed confidence that inflation would return to its target range of 1 per cent to 3 per cent by the latter half of the year.
This decision was in line with expectations among economists, who anticipated the Reserve Bank of New Zealand (RBNZ) would maintain the cash rate at its nearly 16-year high for the eighth consecutive meeting.
Following the announcement, the New Zealand dollar depreciated against the US dollar, declining by 0.8 per cent to NZ$0.61.
Eurozone wages see slight increase in June: Indeed
Wage growth in the eurozone saw a slight increase in June, with salaries gradually catching up to prices after two years of high inflation, according to job site Indeed on Wednesday. Salaries for positions advertised on Indeed rose by 3.7 per cent year-on-year in June, up from 3.5 per cent in the previous three months, though still below the post-pandemic high of 5.4 per cent, Reuters reported.
Overall compensation per employee (CPE) in the eurozone, which includes current jobs, increased by 5.0 per cent in the three months leading up to June, boosted by negotiated contracts that often include one-time payments, as per Indeed’s estimates.
What’s on the radar
This week’s economic calendar is relatively light, with the key highlight being the monthly update on UK GDP.
In contrast, corporate news will be quite active as Wall Street gears up for the earnings season, starting with reports from Citigroup, JP Morgan, and Wells Fargo later in the week.
We’ll also see important inflation data, with the US consumer price index due on Thursday and the producer price index on Friday.
Today, attention will be on speeches from US Federal Reserve officials, including Governor Michelle Bowman and two other top Fed representatives.
Additionally, Bank of England’s chief economist Huw Pill and Catherine Mann are scheduled to speak. On the corporate front, Direct Line Group will be hosting its Capital Markets Day.
Asian markets mixed; oil prices rise
The S&P 500 edged up by 0.07 per cent to close at 5,576.98 points. The Nasdaq saw a 0.14 per cent increase, reaching 18,429.29 points, while the Dow Jones Industrial Average dipped by 0.13 per cent to end at 39,291.97 points.
Nvidia, the AI chipmaker, rose by 2.5 per cent, countering declines in other chip stocks.
Microsoft fell by 1.4 per cent, whereas Tesla surged by 3.7 per cent, totalling a 5 per cent gain for 2024 so far. JPMorgan and Wells Fargo shares each climbed over 1 per cent, with Citi rising by 2.8 per cent.
These banks are set to release their quarterly results on Friday, kicking off the second-quarter earnings season.
S&P 500 futures remained steady during the Asian session following Wall Street’s record-setting gains overnight.
In Europe, EURO STOXX 50 futures went up by 0.12 per cent, while the FTSE 100 closed 0.66 per cent lower on Tuesday. However, its futures indicated a positive trend for Wednesday, increasing by 0.34 per cent to 8,188.5 points.
In Asia, China’s CSI300 increased by 0.2 per cent, Hong Kong’s Hang Seng index climbed nearly 1 per cent, and Japan’s Nikkei 225 surged by 1 per cent to hit a new record high. South Korea’s KOSPI, on the other hand, fell by 0.2 per cent.
In the currency market, the dollar remained steady. Sterling held at $1.2787, and the euro saw a slight dip of 0.01 per cent to $1.0813.
Oil prices bounced back after three days of decline, following a report showing a decrease in US crude and fuel stockpiles last week.
Brent futures rose by 0.24 per cent to $84.86 a barrel, while US West Texas Intermediate (WTI) crude increased by 0.29 per cent to $81.65 per barrel. Gold also saw a slight gain, rising by 0.07 per cent to $2,365.09 an ounce.