Markets
Equity Markets Brace for US Surge, Eyes on Inflation Figures
May
Equity markets across Asia are poised to follow a significant surge in US benchmarks, primarily driven by the tech sector, with investors eagerly awaiting pivotal inflation figures slated for release later on Wednesday to discern the Federal Reserve’s forthcoming actions.
Asian Futures Signal Upward Momentum
Futures for stocks in Japan and Australia indicate upward momentum, while those for Hong Kong remained relatively stable due to the market’s closure for a holiday. Preceding the US consumer price index data, the S&P 500 disregarded Jerome Powell’s indications of prolonged higher interest rates and a mixed assessment of producer inflation. The ensuing report exerted pressure on bond yields and crude oil prices.
Stocks in Japan and Australia poised for growth, Hong Kong steady amid holiday closure. US data impacts markets, WSJ Digital Subscription said.
Tesla Inc. and Nvidia Corp. Spearhead Advances
Tesla Inc. and Nvidia Corp. spearheaded advances among the prominent megacaps, termed the “Magnificent Seven,” while meme-stock traders re-engaged with GameStop Corp. and AMC Entertainment Holdings Inc. US futures showed minimal fluctuation during early trading in Asia.
Anticipation Builds Around US Inflation Data
It’s anticipated that underlying inflation in the US likely moderated in April for the first time in half a year, fostering optimism that inflationary pressures might begin to alleviate. Compared to April 2023, the core CPI is anticipated to ascend by 3.6%. Despite this expected deceleration, the projected annual surge remains substantial, suggesting insufficient grounds for rate cuts.
Market Sentiment Awaits CPI Report
A 22V Research survey finds 49% foresee a “risk-on” market reaction to the CPI report, with only 27% expecting “risk-off.” Analysts, like Anthony Saglimbene from Ameriprise, note equity markets anticipate a slight decrease, seeking confirmation of downward inflation trend. This indicates a sustained retreat rather than a reversal.
Market Metrics and Expert Analysis
The S&P 500 edged towards 5,247, nearing the March 28 closing level of 5,254.35, potentially marking its 23rd record of 2024. Treasury 10-year yields declined by five basis points to 4.44%, while a Bloomberg index of the dollar experienced its first decline in three days. Crude oil retreated by 1.4% in New York, while gold prices ascended. The Nasdaq Golden Dragon Index, tracking US-listed Chinese firms, receded from a seven-month pinnacle reached on Monday.
Expert Opinions and Predictions
Chris Zaccarelli, from Independent Advisor Alliance, predicts a bullish stock market fueled by strong earnings and consumer spending. Yet, he warns of intermittent volatility due to inflation worries. In contrast, David Kostin, of Goldman Sachs, doubts significant S&P 500 gains until year-end, holding a 5,200 target.
Navigating Potential Market Volatility
Bank of America strategist Hartnett cautioned high confidence in rate cuts may lead to equity struggles amidst stagflation fears. BofA’s poll indicates most managers predict Fed rate cuts by late 2024, reaching November 2021 highs. This anticipation stems from a mix of cash reserves, equity allocation, and economic growth expectations.
Dive deep into the realm of finance with a 2-year digital subscription package. Gain access to The Financial Times and Barron’s for comprehensive insights into global financial markets and trends, empowering you with unparalleled knowledge for informed decision-making.
