Wall Steet closed higher on Tuesday as investors await the latest “dot plots” from the Fed and a press conference by Jerome Powell who is expected to reiterate the central bank is awaiting further evidence of inflation cooling, and temper expectations of rate cuts sooner rather than later.
United States
Traders are pricing in just over a 50% chance of a rate cut in June, with expectations for the first cut to come by July. The S&P500 advanced 0.56% along with the Nasdaq Composite 0.39%, Dow Jones 0.83% and Russell 2000 0.57%.
In the latest economic data overnight, new building permits for February were higher than expected at 1.518m vs 1.495m a positive sign for the outlook in the housing market and economy. Elsewhere, Canadian core inflation rose 2.1% for the year to February, moderating from 2.4% previously while headline inflation eased to 2.8% compared to forecasts of an increase to 3.1%.
Europe
European stocks also advanced after the latest economic sentiment indices for the region beat expectations. The Euro Stoxx 600 rose 0.26% along with the DAX 0.31%, CAC 0.65% and FTSE100 0.20%. The latest Eurozone ZEW economic sentiment index for March improved to -80.5 compared to estimates to remain little changed at -82 while Germany’s measure increased to 31.7 well above estimates of 20.5.
Australia
The ASX is expected to rise this morning, with ASX200 futures up 19 points or 0.27% to 7,778. The index rose 0.36% on Tuesday driven by a 2.11% gain in materials followed by energy 1.98% while financials were -0.48% lower. The RBA left interest rates on hold as expected on Tuesday, although notably the tightening basis was removed from the accompanying statement. Governor Bullock noted during the press conference that the central bank could not rule out further rate changes but thinks they’re on the path to getting inflation down to target. In reaction the Australian Dollar was -0.43% lower at 0.6532 while the 3-year government bond yield dropped -6.4 basis points to 3.674%. Traders are now pricing a 96% chance of a rate cut at the August meeting, with a potential second cut by December.
Commodities
To commodities, oil prices extended gains with both WTI and Brent crude 0.87% and 0.58% higher respectively. Iron ore futures rose a further 2.66% on Tuesday although are -0.41% softer this morning at US$106.20 while copper is -1.36% weaker. Gold edged -0.09% lower to US$2,158 an oz, with silver -0.46% lower and Bitcoin retreated -5.14% to US$63,889.
Economic Calendar
20th March 2024
UK Inflation (YoY Feb) 18:00
ECB Lagarde Speech 19:45
Eurozone Consumer Confidence (MoM Mar) 02:00
Fed Policy Decision 05:00
Fed Press Conference 05:30
This article was written by James Woods, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
