Singapore’s central bank (MAS) maintained its monetary policy settings. The ECB hinted at a rate cut soon :: InvestMacro

By JustMarkets 

At the end of the trading day, the Dow Jones Index (US30) was down 0.01%, while the S&P 500 Index (US500) was up 0.74%. The NASDAQ Technology Index (US100) closed positive at 1.68% yesterday. Strength in technology stocks led the overall market higher on Thursday. Apple (AAPL) climbed more than 4% after it said it plans to upgrade its entire line of Mac computers with its proprietary processors designed for artificial intelligence. In addition, shares of chip companies rose Thursday on speculation that upcoming first-quarter earnings results will show strong demand for microchips.

The US Producer Price Index (displays the inflation rate between factories) for March rose by 0.2% m/m and 2.1% y/y in the US, slightly weaker than expectations of 0.3% m/m and 2.2% y/y. However, the core PPI (excluding food and energy) accelerated to 2.4% y/y from 2.0% y/y in February, slightly stronger than expectations of 2.3% y/y and the largest increase in 7 months. US weekly initial jobless claims fell by 11,000 to a 5-week low of 211,000, indicating a strengthening labor market versus expectations of 215,000. New York Fed President Williams said the Fed has made tremendous progress in balancing inflation and employment, but there is no need to lower interest rates soon. FRB Richmond President Barkin said the Fed still has some work to do to contain price pressures and could take its time in lowering interest rates. FRB Boston President Collins added that recent data has eased concerns about adjusting interest rates, although she still expects rate cuts to begin later this year.

Corporate earnings season for the first quarter begins today with results from major banks, including JPMorgan Chase (JPM), Citigroup (C), and Wells Fargo (WFC). The consensus expects first-quarter earnings for S&P 500 companies to rise an average of 3.8% quarter over quarter.

Equity markets in Europe declined on Thursday. Germany’s DAX (DE40) fell by 0.79% yesterday, France’s CAC 40 (FR40) closed down 0.27% yesterday, Spain’s IBEX 35 (ES35) lost 1.16%, and the UK’s FTSE 100 (UK100) closed negative 0.47% on Thursday.

The European Central Bank left key interest rates unchanged and hinted at the possibility of a rate cut if upcoming forecasts indicate inflationary pressures are easing. Lagarde’s speech was soft and had a dovish bias. Still, the policymaker emphasized that the ECB is not committing to a specific rate trajectory and that future decisions will be data-driven.

WTI crude oil prices rose to $86 a barrel on Friday, recovering most of the previous session’s losses, as the prospect of a wider conflict in the Middle East continued to heighten fears of further supply disruptions. Israel is reportedly preparing for a direct attack from Iran in the next 24-48 hours, as Tehran has previously pledged to retaliate to an alleged Israeli attack on its embassy in Syria. The latest rounds of ceasefire talks between Israel and Hamas have also failed, with Israeli Prime Minister Benjamin Netanyahu saying they will continue the war in Gaza.

Natural gas prices for May fell sharply on Thursday due to a larger-than-expected 24 Bcf increase in EIA natural gas inventories last week, which exceeded expectations of 15 Bcf. As of March 29, the US natural gas inventories were 38.9% above the 5-year seasonal average, indicating an oversupply of natural gas.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) was down 0.35%, China’s FTSE China A50 (CHA50) lost 0.16%, Hong Kong’s Hang Seng (HK50) decreased by 0.26% and Australia’s ASX 200 (AU200) was negative 0.44%.

The Monetary Authority of Singapore (MAS) has maintained its April 2024 monetary policy rate target, extending the pause for the fourth straight month amid heightened cost pressures. The Authority said it will maintain the prevailing pace of appreciation in the nominal effective exchange rate of the Singapore dollar. The central bank said it expects the country’s GDP growth to be 1% to 3% this year, supported by a recovery in the manufacturing and financial sectors and normalization in domestic-oriented sectors. Meanwhile, MAS forecasts that the preferred core inflation rate will remain high in the coming quarters before declining in Q4 2024 and 2025. In January-February, core inflation averaged 3.4% on an annualized basis

At its April meeting, the Bank of Korea kept the benchmark rate at 3.5%, as expected. It was the tenth consecutive meeting to keep borrowing costs unchanged, with the central bank emphasizing the need for further progress on price stability before considering monetary easing. Inflation was 3.1% in March, mainly driven by higher agricultural and global oil prices, while core inflation eased to 2.4% from 2.6% in February.

S&P 500 (US500) 5,199.06 +38.42 (+0.74%)

Dow Jones (US30) 38,459.08 −2.43 (−0.01%)

DAX (DE40) 18,097.30 −142.82 (−0.79%)

FTSE 100 (UK100) 7,923.80 −37.41 (−0.47%)

USD Index 105.27 +0.02 (+0.02%)

Important events today:

• – China Trade Balance (m/m) at 06:00 (GMT+3);
• – Japan Industrial Production (m/m) at 07:30 (GMT+3);
• – German Consumer Price Index (m/m) at 09:00 (GMT+3);
• – UK GDP (m/m) at 09:00 (GMT+3);
• – UK Industrial Production (m/m) at 09:00 (GMT+3);
• – UK Manufacturing Production (m/m) at 09:00 (GMT+3);
• – UK Trade Balance (m/m) at 09:00 (GMT+3);
• – Indian Inflation Rate (m/m) at 15:00 (GMT+3);
• – US Michigan Consumer Sentiment (m/m) at 17:00 (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.