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Markets brace for US inflation figures

Markets were mostly down as traders positioned themselves ahead of US inflation figures due out later on Wednesday. European equities fell on Tuesday while US equities just managed to squeeze out gains late in the session. Asian trading was mixed after ratings agency Fitch downgraded its outlook for China’s sovereign credit rating.

Shane Strowmatt, LGT
Tempo di lettura
5 minuto
US economy
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In New York, stock indices were initially under pressure on Tuesday but recovered late in the session following comments from Raphael Bostic. The president of Federal Reserve Bank of Atlanta stuck to his outlook for interest rate cuts this year but said any weakness in the labour market could sway him to support earlier and deeper rate cuts. The Dow Jones Industrial finished the day roughly flat and the S&P 500 gained 0.2%. The Nasdaq-100 was up 0.4%.

In the Asia-Pacific region, stock markets were mixed with Hong Kong’s Hang Seng Index leading regional gains despite a potential future blow to the sovereign credit rating of China by ratings agency Fitch. Fitch affirmed it’s A+ rating, but lowered its outlook to negative, citing projections for higher government deficits and slowing economic output. The Shanghai Composite was trading down 0.7%, while the Hang Seng Index shot up nearly 2%. In Tokyo, the Nikkei 225 was down 0.3% after corporate inflation in Japan was released at 0.8% in March, a third consecutive month of increases. In Australia, the S&P/ASX 200 gained 0.3%. In South Korea, markets were closed on Wednesday. The Reserve Bank of New Zealand kept rates unchanged on Wednesday, in line with market expectations.

Demand for loans by companies in the euro area declined substantially in the first quarter of the year, as companies tried to avoid high borrowing costs, which have shot up since the European Central Bank (ECB) started raising rates in 2022. The ECB’s quarterly survey of euro-area bank lending also showed credit conditions for corporate loans had tightened in Germany and some smaller countries at the start of 2024. However, loan approval criteria for private households eased for the first time since the fourth quarter of 2021. More access to credit for companies and consumers generally translates into more economic activity. The Euro Stoxx 50 lost 0.8% and Germany’s DAX fell 1.3% on Tuesday.

At talks in Cairo, Hamas representatives said an Israeli proposal for ceasefire conditions was insufficient, but they were still considering how to respond. The continued negotiations put pressure on the price of oil which fell for a second day in a row. Bent crude oil futures were trading at USD 89.45 and West Texas Intermediate (WTI) futures were at USD 85.28 per barrel on Wednesday. A prolonged conflict in the Middle East increases the probability of the war expanding to other areas in the region, such as Iran, which has threatened to shut the key Strait of Hormuz shipping lane.

Corporate news in focus: Half-year results from Barry Callebaut.

Economic data in focus: US Consumer Price Index, Bank of Canada interest rate decision.


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