Today, the focus of investors’ attention is directed to the Bank of Canada meeting, as well as Jerome Powell’s testifies before Congress :: InvestMacro

By JustMarkets

As of Tuesday’s stock market close, the Dow Jones Index (US30) decreased by 1.04%. The S&P 500 Index (US500) lost 1.02%. The NASDAQ Technology Index (US100) closed negative at 1.65%. All 3 indices fell off the lows of the week. Weakness in technology stocks impacted the overall market as negative corporate news hamstrung technology stocks. Apple (AAPL) fell more than 2% after Counterpoint Research data showed that iPhone sales in China fell by 24% in the first six weeks of this year. Tesla (TSLA) closed down more than 4%, adding to Monday’s 7% loss after car shipments in China fell. In addition, Advanced Micro Devices (AMD) quotes fell more than 1% after the US government blocked a plan to sell artificial intelligence chips to China.

Today, investors expect Federal Reserve Chairman Jerome Powell to address the US Congress, where he may give clues on the timing and extent of interest rate cuts this year.

The Bank of Canada (BoC) will meet today. The Bank of Canada is forecast to leave the interest rate unchanged at 5%. The highlight of the last Bank of Canada meeting in January was removing the phrase “The Bank remains prepared to raise the policy rate further if needed” from the accompanying statement. History is likely to repeat itself at the current meeting. Recent data showed that Canada’s Q4 GDP was stronger, retail sales were stronger, and the labor market was more robust than expected. The overall CPI fell to 2.9% from 3.4% in December (consensus was 3.3%), and core inflation slowed to 3.3% from 3.6% as expected. According to economists, with such data, the Bank of Canada will not launch its first rate cut until June. The probability of such a scenario is 70%. In the short term, the current meeting is unlikely to change the picture of CAD. Moreover, the decline in CPI may prompt the Bank of Canada to give a more optimistic forecast of disinflation and hint more clearly at the easing of monetary policy. Given the market’s rather conservative assessment of the Bank of Canada’s rate cut, the balance of risks is tilted in favor of a decline in the Canadian dollar.

After hitting an all-time high of $68,970 on Tuesday, bitcoin (BTC/USD) fell more than 7% amid profit-taking by funds. Bitcoin is up more than 63% this year and hit an all-time high on Tuesday thanks to steady inflows into 11 spot bitcoin ETFs that began trading in January and have attracted nearly $8 billion.

Equity markets in Europe were flat yesterday. Germany’s DAX (DE40) was down 0.10%, France’s CAC 40 (FR40) decreased by 0.30%, Spain’s IBEX 35 (ES35) was up 0.47% on Tuesday, and the UK’s FTSE 100 (UK100) closed positive 0.08%.

Silver prices pulled back from a 2-month high to close slightly lower after weaker-than-expected US economic reports on January factory orders. January ISM services were bearish for industrial metals demand.

WTI crude futures are holding near $78 a barrel on Wednesday after losing more than 2% over the past two sessions as weaker demand outweighed an extension of OPEC+ supply cuts. The latest data on factory orders and the US services sector showed signs of a slowdown in US economic activity, adding to fears of weaker energy demand from the world’s largest oil consumer. Analysts also noted a lack of strong stimulus signals from major oil importer China after the country set its growth target for this year at “around 5%”. Meanwhile, major oil producers, including Saudi Arabia, Russia, Iraq, and the UAE, extended voluntary oil production cuts for the second quarter.

Natural gas prices added to Monday’s gains on Tuesday and hit a 1-month high. Natural gas prices have risen since last week after EQT Corp, the largest US natural gas producer, said it would cut net production by 30-40 billion cubic feet through March in response to low prices.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) was down 0.55%, China’s FTSE China A50 (CHA50) was up 1.32%, Hong Kong’s Hang Seng (HK50) lost 1.01% for the day, and Australia’s ASX 200 (AU200) was negative 0.25% for Tuesday.

Hong Kong stocks jumped 1.3% in Wednesday morning trading, partially recovering from a sharp drop the previous day as investors awaited new supportive measures from Beijing following the announcement of China’s 2024 economic growth target of around 5.0% during the opening of the annual plenary session on Monday. The Chinese government also unveiled its annual military budget for this year, which will total 1.67 trillion yuan, up 7.2% from 2023. The Hang Seng Index attempted to break a two-week low, helped by widespread growth across all sectors, including basic materials, industrials, and technology.

The Australian economy grew 0.2% QoQ in 4Q 2023, below the upwardly revised 3Q figure and market estimates of 0.3%. This was the ninth consecutive period of quarterly growth but the slowest pace in the last 5 quarters.

S&P 500 (US500) 5,078.65 −52.30 (−1.02%)

Dow Jones (US30) 38,585.19 −404.64 (−1.04%)

DAX (DE40)  17,698.40 −17.77 (−0.10%)

FTSE 100 (UK100) 7,646.16 +5.83 (+0.08%)

USD Index 103.80 −0.03 (−0.03%)

Important events today:

• – Australia GDP (q/q) at 02:30 (GMT+2);
• – German Trade Balance (m/m) at 09:00 (GMT+2);
• – German Retail Sales (m/m) at 09:00 (GMT+2);
• – UK Construction PMI (m/m) at 11:30 (GMT+2);
• – Eurozone Retail Sales (m/m) at 12:00 (GMT+2);
• – UK Spring Forecast Statement at 14:30 (GMT+2);
• – US ADP Nonfarm Employment Change (m/m) at 15:15 (GMT+2);
• – Canada BoC Interest Rate Decision at 16:45 (GMT+2);
• – Canada BoC Rate Statement at 16:45 (GMT+2);
• – Canada Ivey PMI (m/m) at 17:00 (GMT+2);
• – US JOLTs Job Openings (m/m) at 17:00 (GMT+2);
• – US Fed Chair Jerome Powell Testifies at 17:00 (GMT+2);
• – Canada BoC Press Conference at 17:30 (GMT+2);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+2);
• – US FOMC Member Daly Speaks (m/m) at 19:00 (GMT+2).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.