Daily Digest: Wednesday 10th April
USA
The headline data release for Wednesday was the US YoY and MoM CPI print. Year-on-year data for March came in at 3.5%, 0.1 percentage points above analyst expectations, while month-on-month figures came in at 0.4%, which was also 0.1 percentage points above expectations. Wednesday evening also marked the release of the most recent Federal Open Market Committee (FOMC) meet minutes, providing some insight into the Fed’s current monetary policy outlook, as analysts push rate cut estimates beyond summer of 2024.
The DOW ($INDU) led US equity index losses, falling 1.09% or 422.16 points to 38,461.51, followed by the S&P 500 ($SPX) which fell 0.95% to 5,160.64, and the Nasdaq 100 ($NDX) which fell 0.87% to 18,011.65.
Europe
US CPI prints were the primary determinant of European market direction through Wednesday. The UK’s FTSE 100 (FTSE) signalled a more optimistic outlook through the morning, as traders pushed index prices to their intraday highs of 7,999. However, a hotter than expected CPI print triggered an equity sell off, which pushed prices from 7,997 as low as 7,916. Traders managed a small recovery into the close, testing new resistance at the 7,972 level. Despite an increase in volatility through the day the FTSE managed to rise 0.33%, closing 26.42 points up at 7,961.21. Individual constituent performances were evenly distributed, as 53 companies closed higher and 46 closing lower, with the final company a non-mover.
Performances across other key European indexes were mixed. The STOXX 600 (€SXXP) closed 0.15% higher at 506.69, marking a 0.77 point session increase. Similarly to the FTSE 100 the release of CPI data pushed the index off of its intraday highs, with traders experiencing a small rebound into the close. The German DAX (€GDAXI) rose 0.11% to 18,097.30, while the French CAC (€FCHI) recorded a 3.79 point decline, falling 0.047% to 8,045.38. It is important to note that speculation regarding Thursday’s ECB rate decision was also at play during the session, with traders expecting Eurozone interest rates to be held at 4.5%.
Rest of the World
The Nikkei 225 (¥N225) ended its two day winning streak, closing Wednesday’s trading session 191.32 points (0.48%) down at 39,581.81, erasing nearly half of yesterday’s gains. Traders appear to be struggling to establish a stronger directional trend, with prices continuing to meet heavy resistance at the 39,680 and 37,000 levels respectively. By midday, the former resistance was broken, however, a late afternoon move saw prices rejected at both levels. The Japanese Yen managed to find support through Tuesday evening, as traders welcomed a move away from the ¥152 level. The Yen strengthened to ¥151.572 against the US Dollar, which alongside hesitance regarding US CPI data, was a likely cause for a slowdown in Nikkei activity. Celebrations of a stronger Yen were short-lived, as trading through the US CPI print pushed the Yen to ¥152.952 by 17:30 GMT, as ¥153 becomes a fair estimate into Wednesday evening.
Wednesday’s session marked the lowest close of April for the Shanghai Stock Exchange Composite Index (¥SSE). The index traded some 21.2 points or 0.7% lower, erasing Tuesday’s gains falling to 3,027.33. The session saw a role reversal as the previous support level of 3,033 turned to resistance, which prices were rejected from before the close.
Meanwhile, the Indian Nifty 50 (₹NSEI) managed to provide some reassurance to investors following a marginal decline in value experienced through Tuesday. Prices rose 111.05 points (0.49%) closing at 22,753.80.
Commodities
WTI crude traders managed to end a two day streak of losses, despite prices falling below the $85 midway through the session. Momentum built from the $84.74 level, with new levels of technical support established around $85.30 per barrel. A move to the downside was supported by US crude inventory data which indicated a third week of inventory expansion, with barrels in storage rising a further 5.8 million barrels, against analyst expectations of 900,000 barrels. A further increase in inventories can be indicative of one of two problems, an oversupply of the market, or a decrease in demand caused by a slowdown in economic output. Crude managed to stay in the black, moving 1.17% higher, trading into Wednesday evening at $86.23 per barrel.
As mentioned yesterday, hotter than expected inflation or CPI figures would cause a depreciation in the price of Gold, as the opportunity cost of holding the asset is held higher. Gold traded down to $2,337 per ounce upon the data print, however, traders pushed prices higher throughout the afternoon, reaching $2,348.50 per ounce by 21:00 GMT, a 0.58% 24 hour decline.
What to watch
Chinese CPI (YoY)
ECB rate decision
ECB Monetary Policy Statement
US PPI (MoM)
Sources:
https://uk.finance.yahoo.com/world-indices/
https://uk.finance.yahoo.com/commodities
https://www.londonstockexchange.com/indices/ftse-100
https://www.binance.com/en-GB/price/bitcoin
https://www.binance.com/en-GB/price/ethereum
https://qontigo.com/index/sxxp/
Stock Market Activity Today & Latest Stock Market Trends | Nasdaq
https://coinmarketcap.com/charts/#market-cap
https://www.forexfactory.com
Definitions:
YoY - Year on Year, or, Year over Year
MoM - Month on Month, or, Month over Month
QoQ - Quarter on Quarter, or, Quarter over Quarter
ECB - European Central Bank
BOJ - Bank of Japan
Fed - Federal Reserve
BOE - Bank of England
SNB - Swiss National Bank
DOJ - Department of Justice