Market anticipation builds for U.S. inflation data release

In the early hours of March 12, 2024, S&P 500 E-Mini futures (ESH24) indicated a positive trend, climbing by 0.30%. Investors were eagerly awaiting the release of the U.S. consumer inflation report, which was expected to provide insights into the Federal Reserve’s future interest rate decisions. During Monday’s trading session, Wall Street witnessed a mixed performance. Boeing Co (BA) experienced a notable decline of over 3%, emerging as the top percentage loser on the Dow, following reports of a criminal investigation by the U.S. Justice Department into a midair incident involving an Alaskan Airlines flight.

Market anticipation builds for U.S. inflation data release

Additionally, chip stocks faced a downturn, with Marvell Technology (MRVL) and Advanced Micro Devices Inc (AMD) witnessing declines of more than 4%. Conversely, Bally’s Corp (BALY) saw a surge of over 28% after receiving a takeover offer from Standard General for the remaining shares of the company at $15 each. Today, the spotlight is on the U.S. consumer inflation report, scheduled for release in a few hours. Economists anticipate that the February Consumer Price Index (CPI) will show a month-on-month increase of 0.4% and a year-on-year increase of 3.1%. Attention will also be on the Core CPI data, with expectations of a 0.3% month-on-month increase and a 3.7% year-on-year increase.

Claudia Panseri, Chief Investment Officer for France at UBS Global Wealth Management, emphasized the significance of the day, stating, “Today is another CPI day, we’ll have a lot of volatility around the data. What is important is the market has normalized expectations about interest rate cuts.” Market expectations regarding interest rate cuts were reflected in U.S. rate futures, which priced in a 3.0% chance of a 25 basis point rate cut at the March FOMC meeting, an 18.6% chance at May’s monetary policy meeting, and a 71.7% probability of at least a 25 basis point rate cut at the conclusion of the Fed’s June meeting.

In the bond markets, the yield on United States 10-year rates stood at 4.092%, down by 0.39%. European markets also showed positive momentum, with Euro Stoxx 50 futures rising by 0.16%. Investors analyzed labor market data from the U.K. and final consumer price figures from Germany ahead of the U.S. inflation report. Notably, Wacker Chemie Ag (WCH.D.DX) witnessed a rise of over 5% after providing better-than-expected Q1 guidance.

In the U.K., economic indicators revealed mixed results, with January Average Earnings ex Bonus weaker than expected, while February Claimant Count Change exceeded expectations. Germany’s February CPI met expectations, showing a month-on-month increase of 0.4% and a year-on-year increase of 2.5%. Asian markets closed in the red, with China’s Shanghai Composite Index down by 0.41% and Japan’s Nikkei 225 Stock Index down by 0.06%. Concerns regarding China’s economic rebound and speculation surrounding the Bank of Japan’s monetary policy contributed to the cautious sentiment.

In pre-market trading, Oracle Corporation (ORCL) surged by approximately 13% following better-than-expected Q3 earnings, while ACADIA Pharmaceuticals (ACAD) plunged over 17% after disappointing Phase 3 study results. Vail Resorts Inc (MTN) fell by more than 5% after reporting downbeat Q2 results, while Heritage Insurance Holdings Inc (HRTG) climbed over 22% after announcing better-than-expected Q4 results. Carvana Co (CVNA) gained more than 3% after receiving an upgrade from Jefferies, while Boeing Co (BA) fell by over 1% following reports of issues in 737 MAX production.

As the market eagerly awaited the release of the crucial inflation data, caution prevailed on Wall Street. Investors remained vigilant, closely monitoring the potential implications for both monetary policy decisions and broader market dynamics. The upcoming economic report held significant importance, with its findings likely to shape investor sentiment and influence future market trends. Amidst the anticipation, market participants braced themselves for possible volatility, underscoring the importance of staying informed and prepared for potential shifts in market conditions.

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