US Futures Remain Steady Ahead of Key CPI Report
Equity futures are poised to maintain the gains from yesterday as the market anticipates the release of today's CPI report. This report could significantly impact the market, either validating or contradicting Jerome Powell's recent indications that interest rates will remain high for a longer period. While futures contracts on the S&P 500 remained relatively unchanged, small-caps saw a slight increase. The MSCI All Country World Index also extended its longest streak of gains since January. Nasdaq 100 futures remained flat after the underlying index reached a new all-time high on Tuesday.
Pre-Market Activity
Pre-market activity was quiet, with even the meme stocks showing only low single-digit increases. Arcutis Biotherapeutics shares soared by 24% after first-quarter sales exceeded expectations due to increased demand for its prescription skin medications. On the other hand, Dlocal shares fell by 27% after the Uruguayan fintech reported a net income for the first quarter that missed the average analyst estimate.
Other Market News
In other news, China has pledged to take "resolute measures" in response to the Biden administration's decision to increase US tariffs on a wide range of Chinese imports. Bloomberg also reported that China is preparing a soft nationalization of the real estate sector by purchasing unsold houses to support the property market.
European Stocks Rally
European stocks rallied, led by real estate, telecoms, and utilities. The IBEX 35 outperformed while the CAC 40 was flat, lagging peers. In individual stocks, Burberry Group Plc declined after reporting a slump in sales, dragging the consumer goods sector lower.
Asian Stocks Close at Highest Level Since April 2022
Asian stocks closed at the highest level since April 2022, as technology shares were lifted by key earnings reports and gains in US peers overnight. The MSCI Asia Pacific Index climbed as much as 0.6%, with Sony providing the biggest boost after announcing strong results and a buyback.
US 10-Year Yields Drop to Five-Week Low
US 10-year yields dropped to a five-week low of around 4.42% before US CPI data as treasuries were slightly richer across the curve, following wider gains in core European rates where German yields are lower by 4bp to 7bp, outperforming peers.
Oil Holds Gains After Industry Report Shows Shrinking US Stockpiles
Oil held gains after an industry report showed shrinking US stockpiles, overshadowing a softer demand growth outlook by the International Energy Agency for the rest of the year. WTI traded within Tuesday's range, adding 0.5% to near $78.42.
Conclusion
As the market anticipates the release of today's CPI report, it's clear that this data could significantly impact the market. Whether it validates or contradicts Jerome Powell's recent indications that interest rates will remain high for a longer period remains to be seen. What are your thoughts on this? Share this article with your friends and sign up for the Daily Briefing, which is every day at 6pm.
