Inflationary pressures in Europe continue to decline. OPEC+ countries continued their voluntary production cuts :: InvestMacro

By JustMarkets

Stock indices traded mixed on Wednesday, with the Dow Jones Industrials (US30) falling to a two-week low. Stocks rebounded late in the day after bond yields retreated from early highs following an unexpected decline in the ISM Services Business Activity Index for March in the US. At yesterday’s close, the Dow Jones (US30) index was down 0.11%, while the S&P 500 (US500) Index was up 0.11%. The NASDAQ Technology Index (US100) closed positive 0.23%.

The March US employment change from ADP rose by 184,000, which was stronger than expectations of 150,000. Additionally, the February ADP figure was revised upward to 155,000 from the previously reported 140,000. The data points to a robust US labor market.

Atlanta Fed President Bostic said yesterday that due to the uneven nature of inflation progress, it will likely be appropriate for the Fed to cut interest rates later this year, in the fourth quarter.

Ford Motor (F) shares closed higher by more than 2% after the company reported a 7% increase in US auto sales in the first quarter due to strong demand for gas-electric hybrid vehicles. Intel (INTC) is down more than 8% and topped the list of losers on the Dow Jones (US30) and NASDAQ (US100) markets after the company said losses in its fab business have gotten worse, and the division may not reach its break-even point for several years.

Equity markets in Europe were mostly up on Wednesday. Germany’s DAX (DE40) rose by 0.46%, France’s CAC 40 (FR40) closed up 0.29%, Spain’s IBEX 35 (ES35) added 0.52%, and the UK’s FTSE 100 (UK100) closed positive 0.03%.

The Eurozone Consumer Price Index for March declined to 2.4% y/y from 2.6% y/y in February, better than expectations of 2.5% y/y. The core CPI declined to 2.9% y/y in March from 3.1% y/y in February, better than expectations of 3.0% y/y and the slowest growth rate in 2 years. The Eurozone unemployment rate for February was unchanged at a record low of 6.5%, beating expectations of a decline to 6.4%. The disinflation trend coincided with recent remarks by ECB policy director Robert Holzmann, who said that a slowdown in price growth could make a June rate cut appropriate.

Financial stocks led the gains on the corporate front, with BNP Paribas, Intesa Sanpaolo, and Santander adding more than 1.5%. German auto giants also rose significantly, with Volkswagen adding 2.5% and BMW jumping more than 5%. Finally, Siemens closed in the green after clarifying that it has no plans to make an offer to buy British engineering company Renishaw.

WTI crude oil prices fell slightly and are trading just below $86 per barrel after the latest EIA data showed an unexpected rise in US inventories. US crude inventories rose by 3.21 million barrels instead of the expected decline of 1.511 million barrels. Nevertheless, prices remained near 5-month levels as traders were concerned that the Middle East’s geopolitical tensions could disrupt oil supplies. In addition, OPEC+ countries decided to extend a voluntary production cut of 2.2 million barrels per day until June to stabilize the market.

Copper prices rose to $4.2 a pound, the highest since April last year, amid a weaker dollar after evidence of falling inflation strengthened the case for lower interest rates. Data compiled by ISM showed that prices in the service sector rose by the least in four years. Copper prices were also boosted by good economic data from China, which refuted fears of weaker demand in the country.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) fell by 0.97%, China’s FTSE China A50 (CHA50) decreased by 0.31%, Hong Kong’s Hang Seng (HK50) was down 1.22% by Wednesday’s close and Australia’s ASX 200 (AU200) was negative 1.34%.

Judo Bank Australia’s composite business activity index rose to 53.3 in March 2024 from 52.1 in the previous month. Australia’s private sector output growth accelerated sharply at the end of the first quarter, reaching the fastest pace in almost two years. This was mainly due to strong service sector growth, although output continued to contract.

S&P 500 (US500) 5,211.49 +5.68 (+0.11%)

Dow Jones (US30) 39,127.14 −43.10 (−0.11%)

DAX (DE40) 18,367.72 +84.59 (+0.46%)

FTSE 100 (UK100) 7,937.44 +2.35 (+0.03%)

USD Index 104.26 −0.55 (−0.53%)

Important events today:

• – Australia Services PMI (m/m) at 01:00 (GMT+3);
• – Australia Retail Sales (m/m) at 03:30 (GMT+3);
• – Switzerland Consumer Price Index (m/m) at 09:30 (GMT+3);
• – German Services (m/m) PMI at 10:55 (GMT+3);
• – Eurozone Services (m/m) PMI at 11:00 (GMT+3);
• – UK Services PMI (m/m) at 11:30 (GMT+3);
• – Eurozone Producer Price Index (m/m) at 12:00 (GMT+3);
• – Eurozone ECB Monetary Policy Meeting Accounts at 14:30 (GMT+3);
• – Canada Trade Balance (m/m) at 15:30 (GMT+3);
• – US Trade Balance (m/m) at 15:30 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+3).

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.