June S&P 500 futures (ESM23) are up +0.28%, and June Nasdaq 100 E-Mini futures (NQM23) are up +0.21% this morning after three major U.S. benchmark indices finished the regular session mixed as market participants looked ahead to crucial U.S. inflation data that could shed light on Federal Reserve’s next interest-rate move.
In Tuesday’s trading session, the blue-chip Dow notched a 7-week high, helped in part by gains in industrial stocks, with the sector’s bellwether, Caterpillar Inc (CAT), climbing more than +2%. At the same time, the benchmark S&P 500 closed just below the unchanged mark, snapping a two-day winning streak. In addition, the tech-heavy Nasdaq 100 closed lower for the fifth time in the last six sessions as a rise in U.S. Treasury yields weighed on tech and tech-adjacent megacap stocks.
Chicago Fed President Austan Goolsbee said Tuesday the Federal Reserve should exercise “prudence and patience” in raising interest rates after last month’s banking turmoil. “At moments like this, of financial stress, the right monetary approach calls for prudence and patience - for assessing the potential impact of financial stress on the real economy,” Goolsbee said. Also, Philadelphia Fed President Patrick Harker said he still believes the U.S. central bank needs to get interest rates above 5% before pausing to bring inflation back to its 2% target. At the same time, Minneapolis Fed President Neel Kashkari warned the Fed’s interest-rate increases and the tightening of credit conditions after two bank failures last month could lead to a recession. “We need to get inflation down. ... If we were to fail to do that, then your job prospects would be really hard,” he added.
The International Monetary Fund on Tuesday trimmed its 2023 global real GDP growth forecast to 2.8% from a January forecast of 2.9% and cut its 2024 global real GDP growth projection to 3.0% from 3.1%.
Today, all eyes are focused on the U.S. consumer inflation report in a couple of hours. Economists, on average, forecast that March U.S. CPI will come in at +0.2% m/m and +5.2% y/y, compared to the previous values of +0.4% m/m and +6.0% y/y.
Ahead of an inflation report, U.S. rate futures have priced in a 71.2% probability of a 25 basis point rate increase and a 28.8% chance of no hike at the May meeting.
Also, investors will likely focus on U.S. Core CPI data. Economists anticipate Core CPI to be +0.4% m/m and +5.6% y/y in March, compared to the previous figures of +0.5% m/m and +5.5% y/y.
U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be -0.583M, compared to last week’s value of -3.739M.
In addition, market participants will be closely watching the release of the Federal Reserve’s minutes from the March meeting for fresh insights on the central bank’s monetary policy trajectory and officials’ outlooks on the health of the U.S. financial system.
In the bond markets, United States 10-Year rates are at 3.441%, up +0.21%.
The Euro Stoxx 50 futures are up +0.19% this morning as investors cautiously await the U.S. inflation data for March that could guide future Federal Reserve monetary policy. Meanwhile, French central bank chief Francois Villeroy de Galhau said on Tuesday that Eurozone inflation “is at risk of getting entrenched above 2%,” reiterating the need for the European Central Bank to keep fighting excessive price growth. Also, investors will likely focus on comments from ECB Vice President Luis de Guindos later in the day. In corporate news, shares of Volvo Ab (VOLVB.S.DX) jumped over +7% after the truck maker reported a record first-quarter profit due to higher revenue and margins.
The European economic data slate is mainly empty on Wednesday.
Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.41%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.57%.
China’s Shanghai Composite today closed slightly higher as investors mainly held back on taking new positions before the release of a crucial U.S. inflation report that would likely influence the Federal Reserve’s policy decision. Also, investor sentiment took a hit after softer-than-expected inflation data released on Tuesday pointed to a weaker-than-expected economic recovery in the country. Meanwhile, artificial intelligence stocks and CSI Computer Index gained ground on Wednesday, with Inspur Electronic Information Industry Co Ltd climbing over +5%. In addition, a rally in Chinese telecom stocks helped to boost the overall market, with China United Network Communications Ltd and China Telecom Corp Ltd rising more than +6%.
“The rapid increases in bank deposits together with the soft print of CPI may suggest that consumers have remained cautious, which argues for some more support,” said Frances Cheung, rates strategist at Oversea-Chinese Banking Corp.
At the same time, Japan’s Nikkei 225 Stock Index closed higher for a fourth straight session as signs of consumer spending in department stores and Warren Buffett’s intentions to increase his investments in local stocks boosted investor sentiment. Also, data on Wednesday showed that annual producer inflation in the country eased for a third straight month in March. Meanwhile, J.Front Retailing gained more than +1% after the department-store operator reported a tripling in net profit for the year ended February while forecasting further growth. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -1.40% to 16.90.
“The market was lifted by Buffett's strong message. The five trading firms were strong, but also investors looked for shares that would become his new targets,” said Shigetoshi Kamada, general manager at the research department of Tachibana Securities.
The Japanese March PPI stood at 0.0% m/m and +7.2% y/y, stronger than expectations of -0.3% m/m and +7.1% y/y.
The Japanese February Core Machinery Orders came in at -4.5% m/m and +9.8% y/y, stronger than expectations of -7.8% m/m and +2.9% y/y.
Pre-Market U.S. Stock Movers
HeartCore Enterprises Inc (HTCR) spiked over +120% in pre-market trading after the software development company announced that it had signed an agreement with rYojbaba Inc. for its tenth Go IPO consulting service win.
Horizon Acquisition II Corp (HZON) climbed more than +11% in pre-market trading after the company announced that it had agreed to terminate its business combination agreement with Flexjet, Inc.
Confluent Inc (CFLT) gained more than +4% in pre-market trading after Morgan Stanley upgraded the stock to overweight from equal weight.
InflaRx N.V. (IFRX) plunged over -5% in pre-market trading after the clinical-stage biopharmaceutical company priced its underwritten public offering of about 9.42M shares at an offering price of $4.25 per share.
MongoDB (MDB) rose more than +3% in pre-market trading after Morgan Stanley upgraded the stock to overweight from equal weight.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - April 12th
Louis Vuitton ADR (LVMUY), Aeon ADR (AONNY), Shaw B (SJR), CK Infrastructure ADR (CKISY), Freedom (FRHC), Hysan Development Co (HYSNY), Washington Federal (WAFD), Apogee (APOG), Riley Exploration Permian (REPX), Indus Realty Trust (INDT), Argan (AGX), Sportsmans (SPWH), Pure Cycle (PCYO), BayCom (BCML), Rent the Runway (RENT), GoldMining (GLDG), Platinum Group Metals (PLG), Bed Bath & Beyond (BBBY), Lifecore Biomedical (LFCR), Theratechnologies (THTX).
Traders Target Equinox Gold (EQX) As The Precious Metals Continue To Shine
Tesla Surges, As Do Its Put Premiums - Providing Income Plays For Short Investors
More Stock Market News from Barchart
- Stocks Settle Mixed Ahead of Wednesday’s U.S. Inflation News
- Tesla Surges, As Do Its Put Premiums - Providing Income Plays for Short Investors
- Stocks Mixed as Higher Bond Yields Weigh on Tech
- Exxon’s Potential Pioneer Deal: Short-Term Gains for Long-Term Pain
