Stock futures were flat in overnight trading on Tuesday as investors turned their attention to the highly anticipated inflation report for March. Dow Jones futures remained unchanged, while S&P 500 and Nasdaq 100 futures slightly increased by 0.04% and 0.07%, respectively.
On Tuesday, the S&P 500 closed with little change, while the Dow Jones Industrial Average gained 0.29% and the Nasdaq Composite lost 0.43%. With Wall Street looking ahead to March’s consumer price index, economists predict that CPI rose by 0.2% in March, which could influence the Federal Reserve’s rate decision in May and result in the cessation of the central bank’s rate-hiking regime.
Investors and traders are keeping an eye on the CPI number, which could cause significant changes in the stock market. Additionally, minutes from the Federal Reserve’s March policy meeting are expected to be released on Wednesday, providing further insight into the central bank’s decision to raise interest rates amid the collapse of Silicon Valley Bank and the turmoil that shook the banking industry. As the first-quarter earnings season begins, investors await reports from JPMorgan Chase, Wells Fargo, Citigroup, and UnitedHealth, which will test the health of the U.S. economy and consumers.
In the stock market on Tuesday, most sectors remained stable without significant changes. However, the energy sector was the top gainer with an increase of 0.89%, while financials, materials, and industrials followed with gains ranging between 0.59% and 0.85%.
Conversely, the information technology sector experienced the biggest loss with a decline of 1.03%, and communication services also decreased by 0.43%. Consumer discretionary and utilities sectors showed little change, while real estate, health care, and consumer staples sectors had small but positive gains.
Major Pair Movement
The US dollar index fell 0.3%, driven by gains in the EUR/USD and GBP/USD pairs, as the early risk-off sentiment that led to dollar buying retreated despite a rise in Treasury yields. The USD/JPY also rebounded after dropping to 132.97 lows, driven by a rise in Treasury yields earlier in the day. However, a call for policy prudence and patience by Chicago Fed President Austan Goolsbee and IMF’s warning about a “perilous combination of vulnerabilities” in financial markets tempered the Treasury yield rise.
The concerns about the impact of credit tightening on top of monetary tightening remain, as emergency bank borrowing from the Fed remains quite high and bank deposits have only expanded marginally following March’s sharp drop. Wednesday’s US core CPI data will be most relevant, as the expected plunge in the overall year-on-year inflation rate is a function of last March’s post-Ukraine invasion peak in oil versus March’s post-invasion trough. Additionally, the minutes from the Fed’s last meeting will also be released. The ECB and BoE are expected to hike rates at their upcoming meetings, with the BoE having roughly 50bp of hikes by September’s 4.66% implied peak, which still seems weak given the UK’s inflation at 10.4%.
|Currency||Data||Time (GMT + 8)||Forecast|
|USD||Consumer Price Index (Mar)||20:30||0.20%|
|USD||Core Consumer Price Index (Mar)||20:30||0.40%|
|USD||Consumer Price Index (Yearly)||20:30||5.10%|
|GBP||BOE Gov Bailey Speaks||21:00|
|CAD||Bank of Canada Rate Statement||22:00||4.50%|
|CAD||BOC Monetary Policy Report||22:00|
|CAD||BOC Press Conference||23:00|