February kicked off on Wednesday without too much
trepidation about how all that will pan out. Asia and European
bourses pushed higher despite a mixed bag of economic news, but
S&P500 futures did slip into the red ahead of Wall St's open.
Softer U.S. Treasury yields were calm and collected, the dollar easier and volatility gauges relatively serene.
An expected quarter-point interest rate rise from the U.S. Federal Reserve later on Wednesday would ruffle few feathers as long as the central bank doesn't feel the need to accompany its slowing of the rate hikes with a harsh steer against market pricing for rate cuts later in the year. Half-point rate rises from the European Central Bank and Bank of England are now the best guess, although dire economic readouts from Britain's ailing economy this year may mean the risk to that consensus is that a split BoE council opts for a smaller move.
News that euro zone headline inflation fell much faster than forecast last month to 8.5% - its lowest since last May - will also take some pressure off the ECB, even if stickier 'core' inflation means a half-point point move is still the most likely outcome this week. U.S. markets were also enthused by disinflation signals on Tuesday as data showed U.S. labor costs increasing at their slowest pace in a year in the fourth quarter while wage growth slowed. That was a major relief for those worried about the persistent tightness in the U.S. jobs markets - one reason the Fed may continue to sound hawkish later on Wednesday and why Friday's payrolls update is even more important than usual. Before the Fed announcement, ADP releases its January private sector employment readout for last month and markets will also scan the December JOLTS job openings report. In Asia, surveys showed the contraction in China's business activity easing in January as the country opens up again after strict COVID lockdowns. The speed of the pickup disappointed some, however, and may in itself cool fears about the inflationary impact of China's sudden return to business as usual.
India's government unveiled one of its biggest jumps in capital spending in the past decade in its annual budget and said the fiscal deficit would fall, as it tries to create jobs while maintaining financial discipline. The news was less good for one of India's richest citizens. Shares in tycoon Gautam Adani's conglomerate plunged again on Wednesday as a rout in his companies deepened to $84 billion in the wake of a U.S. short-seller report, with the billionaire also losing his title as Asia's richest person.
While markets await the 'Triple-A' of Big Tech releases on
Thursday, Meta is due to report later today and the
dour news from elsewhere in the tech sector kept coming.
Overnight, Snap said current quarter revenue could
decline by as much as 10%, sending its shares down 14% as the
company struggles with weak advertising demand.
Intel said it had made broad cuts to employee and
executive pay, a week after the company issued a
lower-than-expected sales forecast driven by a loss of market
share to rivals and a PC market downturn.
Key developments that may provide direction to U.S. markets
later on Wednesday:
* U.S. Federal Reserve policy decision, press conference with
Fed Chair Jerome Powell
* US Jan ISM manufacturing survey, ADP Jan private sector job
report, Dec JOLTS job openings report
* U.S. corp earnings: Meta Platforms, MetLife, Mckesson, Boston
Scientific, Otis Worldwide, Old Dominion, Align Technology,
Corteva, Thermo Fisher Scientific, Altria, Humana, Peleton etc
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Rates to catch up with inflation? Snap expects its first ever revenue decline India's fiscal deficit India's fiscal deficit Adani stock rout deepens Adani stock rout deepens ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(By Mike Dolan, editing by Raissa Kasolowsky
mike.dolan@thomsonreuters.com. Twitter: @reutersMikeD)
