Three main U.S. bourses concluded the regular session in the red due to fresh job market information that fanned traders’ worries that perhaps the Federal Reserve might prolong its aggressive pace of rate increases. Today, March S&P 500 futures (ESH23) are drifting slightly lower -0.07%. Drops in the Industrials, Consumer Services, and Consumer Goods sectors have been the primary causes of the decline in 3 key U.S. stock indexes.
Underlying Fundamentals
According to the Labor Department’s statistics published on Thursday, filings for state unemployment benefits surprisingly decreased to 190K the other week, fewer overall than the 214K projected. This highlights the job market’s durability and may convince the Fed to maintain abreast its aggressive fare increases.
The tightening labor market is just one of the data sets that the Fed continuing to find puzzling. The job market shows almost no indicators of deterioration, which is one of the elements the Fed has been relying on now to keep greater rates for prolonged time span.
On Thursday, Lael Brainard, the vice chair of the Federal Reserve, declared that in order to control rising prices, the Fed will be required to maintain high rates of interest “for certain time.” Susan Collins, president of the Boston Fed, endorsed the idea of increasing interest rates mere more than 5%. Collins also stated that she prefers a slower growth rate of rate increases. Further moderate rate changes during the current phase will allow us to effectively address the conflicting risks that monetary policy is currently facing, she continued.
In the meantime, February’s monetary and fiscal policy session is expected to result in a 97.2percentage probability of a 25 basis point rise in interest rates and a 2.8percentage – point possibility of a 50 basis point hike, according to U.S. rate futures.
The 4th quarter results show continues to command traders’ attention. Experts predict that S&P 500 companies’ quarterly profit would drop year over year by 2.8percent contrary to an initial forecast of 1.6percentage – point decline.
Many sights are on the U.S. Existing Home Sales statistics that will be released within the next few hours. According to analysts’ predictions, Dec existing home sales would be 3.96 million, lower from the prior reading of 4.09 million.
United States 10-Year rates are at 3.429percentage points in the bond markets, rise +0.89 percent.
Traders are hoping for a partial recovery from Thursday’s market correction as they observe the Euro Stoxx 50 futures, which are rising +0.27percentage points this morning. Worries about slowing economic growth and stringent monetary and fiscal policy remain very much in the front of traders’ minds. Christine Lagarde, President of the European Central Bank, stressed the necessity for strong monetary policy measures on Thursday by stating that inflation rates remained “way too excessive.”
- Today saw the posting of Germany’s PPI figures as well as U.K. Central Retail Sales and U.K. Retail Sales.
- Compared to predictions of +0.4percent in terms m/m and -4.4percent y/y, the U.K.’s Dec core retail sales reported in at -1.1percent m/m and -6.1percent y/y.
- Compared to predictions of +0.5percent m/m and -4.1percent y/y, U.K. Dec retail sales were in at -1.0percent m/m and -5.8percent y/y.
- In contrast to predictions of -1.2percent m/m & +20.8% y/y, the German Dec PPI was published at -0.4percent m/m and +21.6percentage y/y.
- Today’s Asian equity markets closed in the green. China’s Shanghai Composite Index (SHCOMP) and Japan’s Nikkei 225 Stock Index (NIK) both posted positive closing percentages.
But after data revealed showed consumer price index inflation surged to a 41-year record in Dec, Japan’s Nikkei 225 Stock Index closed stronger. Increases in the transport, retail, and fishing industries propelled the index’s rising trend. The Nikkei Volatility, which accounts for the implied volatility of Nikkei 225 options, plunged 8.41percentage points to settle at 17.54, a fresh 30-day bottom.
