Tuesday, February 27, 2024 4:03 a.m.
Today’s market action: Asian markets reflect Wall Street’s caution, US dollar slides ahead of key data, Bitcoin rises above $57,000, and Japan’s core inflation declines. Focus on PMI and inflation data
U.S. stocks have edged lower after a recent surge fueled by artificial intelligence, with investors focused on upcoming economic data. Meanwhile, Asian markets faced challenges. Japan’s core inflation has reached its lowest level in nearly two years. Looking ahead, it’s important to stay tuned to important global economic updates. This week, major countries will release key indicators such as the Manufacturing Purchasing Managers’ Index (PMI) and the Consumer Price Index (CPI) for February. Here are five key takeaways from the day.
Japan’s slowing inflation makes it difficult for the Bank of Japan to exit its negative interest rate policy
Japan’s core inflation rate has slowed for the third consecutive month, complicating the Bank of Japan’s interest rate plans. The core consumer price index rose 2.0% in January, down from 2.3% in December and the lowest level since March 2022 due to lower costs of imported raw materials, official data showed. Despite optimism about reaching the 2% inflation target, recent figures suggest a move away from the central bank’s accommodative monetary policy, especially as the economy has contracted for two consecutive quarters due to weak consumer spending. was not substantiated.
UK retail prices show weakest rise since March 2022: BRC
UK store price increases this month were the slowest in almost two years, the British Retail Consortium (BRC) reported on Tuesday. This trend signals a welcome easing of inflationary pressures for the Bank of England (BoE). According to Reuters, retail price inflation fell to 2.5% in February from 2.9% in January, the smallest annual increase since March 2022. The slowdown was mainly due to slower growth in food prices, which rose 5.0% year-on-year, slowing from January’s 6.1% rise. Non-food prices were flat at 1.3%, the same rate of increase as in January.
Kansas City Fed’s Schmidt urges caution in cutting interest rates
In his first policy speech, Kansas City Fed President Jeffrey Schmidt emphasized continued concerns about the persistent threat of high inflation. He stressed that the fight against inflation was not over yet and made it clear that there was no rush to cut interest rates.
Market sentiment has already shifted, with expectations of the Federal Reserve’s first interest rate cut in May or June, with a roughly 70% chance of doing so. Futures contracts suggest a rate cut of just over three quarter points per year, a downward revision from initial forecasts of five rate cuts at the beginning of the month.
This week’s hot news
This week is full of important economic events and data releases in various regions around the world. On Thursday, the Federal Reserve will release the core personal consumption expenditures (PCE) price index, which is closely monitoring inflation. In addition to inflation data from the Eurozone and Australia, the Reserve Bank of New Zealand (RBNZ) interest rate decisions and China’s Purchasing Managers Index (PMI) are also expected to be released.
Here’s a breakdown of other key events to watch this week: Tuesday: Germany’s GfK Consumer Climate Survey and US January durable goods orders data. Wednesday: Australia’s January CPI inflation data, Germany’s monthly retail sales, New Zealand’s central bank’s official cash rate decision, and revised US fourth quarter GDP growth. Thursday: China’s NBS manufacturing and non-manufacturing PMI data, Germany’s February unemployment data, CPI and HICP inflation data, India’s Q3 GDP statistics, and US January personal consumption and PCE prices Index data.
Asian markets reflect cautious sentiment on Wall Street
The Dow Jones Industrial Average fell 0.16% to 39,069.23 points, the S&P 500 fell 0.38% to 5,069.53 points, and the Nasdaq Composite Index fell 0.13% to 15,976.25 points. Google’s parent company Alphabet fell 4.44% after announcing plans to restart an AI tool it suspended last week due to inaccuracies. Warren Buffett’s Berkshire Hathaway fell 1.94% on concerns about a possible lawsuit against subsidiary PacifiCorp. Domino’s Pizza soared 5.85% on strong quarterly sales, while Intuitive Machines plunged 34.62% after its lunar rover tipped over after landing.
In Asian markets, Japan’s TOPIX index rose 0.5%, and the export-heavy Nikkei Stock Average rose 0.3%. Hong Kong’s Hang Seng index remained stable, while mainland China’s CSI300 index rose 0.2% in early trade. South Korea’s Kospi index fell slightly by 0.1%. The 10-year Treasury yield fell 2 basis points to 4.27%, and the 2-year Treasury yield fell 4 basis points to 4.70%. Brent crude oil futures remained within recent levels, trading at $82.52 per barrel.