Daily Digest: Wednesday 22nd May
USA
The three major US indexes moved to the downside through Wednesday, with movements driven by interest rate uncertainty and global inflation concerns. The Dow ($INDU) led declines falling 201.95 points, erasing yesterday’s gains as the index moved to 39,671.04. Meanwhile, the S&P 500 ($SPX) fell 14.4 points (0.27%) to 5,307.01 and the Nasdaq 100 ($NDX) fell 8.6 points (0.05%) to 18.705.2.
Attention will turn to the poster child of the US AI boom Nvidia ($NVDA) after hours as the company reports their Q1 earnings for 2024. A positive print will likely see the company test the $1,000 per share level as traders strengthen their bets on the semiconductor sector.
Europe
The macroeconomic focus of Wednesday’s European session was the UK’s CPI and Core CPI data prints for April. Data fell short of analyst expectations leaving both investors and traders disappointed not by the direction of data but by the speed of change. YoY CPI for April came in at 2.3% against analyst expectations of 2.1%, despite falling 0.9 percentage points from March, figures missed expectations by 0.2 percentage points. Core CPI also came in lower than last month at 3.9% but fell short of analyst expectation of 3.6%. Slower than expected reductions in consumer inflation have once again drawn traders attention to their BOE interest rate cut estimates, the current consensus remains between June and August. However, the possibility of rate cuts this early in 2024 is drawn into question as traders reassess the effectiveness of the BOE’s current monetary policy approach. As previously noted, higher levels of inflation over a prolonged period of time reduces the likelihood that BOE will pivot, as higher interest rates are a tool used to directly target consumer inflation within an economy.
As mentioned above, traders were left disappointed with April’s UK CPI data prints as the FTSE 100 (FTSE) extended yesterday’s declines, falling 46.12 points (0.55%) to 8,370.33. Similarly to Tuesday, sentiment was echoed across Europe with the Pan European benchmark, the STOXX 600 (€SXXP) falling a further 1.77 points (0.34%) to 521.18, while the French CAC (€FCHI) fell 49.35 points (0.61%) to 8,092.11, and the German DAX (€GDAXI) fell 46.56 points (0.25%) to 18,680.20.
Rest of the World
Japanese equities continued lower for the second consecutive session as the Nikkei 225 (¥N225) slid a further 329.83 points (0.85%) to 38,617.10. The index hit significant resistant around the 38,770 level, before falling to support around 38,592 just 30 minutes before the session close. Equity performances have not been substantially influenced by poor JPY performances throughout the last fortnight as the Yen continued lower against the USD, falling to 156.48 as of 17:03 GMT.
The Shanghai Stock Exchange Composite Index (¥SSE) a gauge for Chinese listed equity performances experienced a marginal change in sentiment as momentum turned to the upside following Tuesday’s 0.42% declines. Despite larger gains early in the session, traders met resistance around the 3,166 level causing prices to fall back to 3,158.54 marking a 0.57 point (0.018%) session gain.
The Indian Nifty 50 (₹NSEI) continued higher for a third consecutive session rising as traders extended their gains in a 68.75 points (0.31%) move to the upside. As of the close, the index was trading at 22,597.80 just 196.6 points of its 52-week highs as investor reinforce their demand for Indian equities.
Commodities
WTI crude prices extended declines for a third consecutive session as prices fell 1.67% to $77.35 per barrel (21:00 GMT).
Gold traders also failed to stem Tuesday’s declines with the precious metal falling a further 1.83% to $2,381.50 per ounce as of 21:00 GMT.
What to Watch Tomorrow
Eurozone Flash Manufacturing/Services PMI
Japanese Flash Manufacturing/Services PMI
US Flash Manufacturing/Services PMI
US Earnings:
Nvidia ($NVDA)
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