Asia-Pacific Markets
Asian stocks were mostly subdued, tracking a choppy Wall Street session. The ASX 200 gained on strength in Tech and Financials despite weaker-than-expected jobs data. Japan’s Nikkei 225 initially rose but fell below 39,000 due to a weaker yen and higher PPI. Chinese markets struggled, with property stocks under pressure and tech mixed as Tencent outperformed on earnings. Notable corporate earnings included NetEase and JD.com, which narrowly beat revenue expectations.
European Equities
European markets opened mixed but shifted to a positive bias, led by the Euro Stoxx 50. Energy and Basic Resources sectors performed well, supported by resilience in commodity demand and rising oil prices. ASML surged 4.5% after reaffirming its 2030 sales forecast, driving Tech outperformance, while Merck weighed on Healthcare. U.S. equity futures are modestly positive, with the Russell 2000 attempting to recover recent losses.
US Market Outlook
U.S. equity futures traded slightly higher as investors awaited the release of CPI data, expected to signal the Fed’s policy direction. The dollar extended gains, with USD/JPY surpassing 156. Treasury yields stabilized after Tuesday’s selloff, while pre-market movers included significant shifts in the likes of Tesla and Rivian. CPI data, along with several Fed speakers, are expected to drive sentiment later today.
Fixed Income
U.S. Treasury yields edged higher, with the belly of the curve leading as investors look to U.S. CPI and Fed commentary for guidance. Bunds were softer but off earlier lows following steady European employment data. UK Gilts continued to underperform amid hawkish rhetoric from BoE’s Catherine Mann, who noted persistent inflationary pressures in the UK.
Commodities
- Crude Oil: Brent crude traded within a tight range around $72/bbl as the dollar strengthened and traders monitored ongoing Middle East tensions.
- Precious Metals: Gold remained range-bound between $2,597 and $2,613/oz, while silver and platinum rose on safe-haven demand.
- Base Metals: Copper slipped amid cautious sentiment and a recent Citi downgrade, highlighting potential risks from slower Chinese industrial demand.
Currencies
- DXY: The dollar index continued its rally, nearing 2023 highs as investors positioned for CPI data and further Fed guidance.
- EUR/USD: The euro fell to a YTD low of 1.0507 before stabilizing, weighed by European economic concerns.
- USD/JPY: The yen weakened further, with USD/JPY breaching 155 on continued loose Japanese monetary policy.
- GBP/USD: The pound remained pressured against the dollar, with BoE’s Mann signaling the potential for a more aggressive UK monetary stance.
Crypto
Bitcoin continued its rally, trading above $91,000, as it benefitted from investor interest in alternative assets amid global market uncertainties.
Notable Headlines
- BoE’s Mann: Emphasized persistent UK inflationary pressures, particularly in services, and highlighted potential risks from energy price volatility.
- ECB’s de Guindos: Reported positive progress on inflation, with indicators moving towards the ECB’s 2% target.
- Middle East: Increased tensions as Israel conducted airstrikes in Beirut and Syria, raising concerns for potential global oil market disruptions.
- China: China reinforced its stance in the South China Sea, while the U.S. sanctions office investigates UBS for Russian client dealings inherited from Credit Suisse.
Notable Events Today
Key data includes U.S. CPI, Fed and ECB speeches, and earnings from Disney, Brookfield, Applied Materials, and Advanced Auto Parts.
