MARKET WRAPS
Watch For:
Italy retail sales; trading updates from Tesco, Bang & Olufsen
Opening Call:
Shares may post gains in opening trade in Europe on Wednesday ahead of U.S. inflation data. In Asia, stock benchmarks were mixed; Treasury yields were flat; the dollar weakened; while oil was steady and gold was flat.
Equities:
European shares are poised to rise, as investors look ahead to fresh U.S. inflation data.
Forecasters expect a small slowdown on core CPI, which would indicate the hot January and February data were just a blip. Another hot print, however, would reduce hopes of interest rate cuts this summer.
"The direct result could just be...taking a few more rate cuts off the table, or even pushing back the first rate cut until after the election, " SEI said. A downside surprise, it said, would keep the Fed waiting for more data to confirm that inflation is cooling.
Forex:
The dollar stalled in Asia, despite Friday's better-than-expected U.S. jobs data, with investors reluctant to buy the currency ahead of Wednesday's U.S. inflation data and due to signs of an improving European economy, said MUFG.
Investors are cautious that March inflation data could be weaker following two stronger-than-expected batches of data, potentially resulting in June rate-cut expectations quickly increasing, it said.
Signs of better growth conditions in Europe, with German industrial production data this week picking up and surveys pointing to an improved U.K. outlook, could be an important factor supporting euro and sterling, which "will help curtail dollar buying."
Bonds:
Treasury yields were barely changed ahead of U.S. inflation data likely to affect markets' expectations regarding the pace of monetary easing.
March core CPI is expected to slow slightly, which analysts expect would keep the Fed on pace for an initial 25-basis point cut in June or July, while an upward surprise could damp expectations of a summer cut and move yields higher.
"It's exactly because U.S. labor-market indicators are so ambiguous (hiring data is strong, but hiring surveys are weak) that makes the U.S. inflation data so much more important as a driver of the outlook for Fed policy in the next few months," said Macquarie.
Energy:
Oil was steady in Asia as markets eyed fresh Gaza ceasefire talks.
There are signs of profit-taking as diplomatic talks continue, Westpac said.
However, Iran's Revolutionary Guard warned that it has the option of disrupting trade through the Strait of Hormuz if necessary, the ANZ Research team said.
This should keep the risk of disruption to oil supply high and support oil prices, it added.
Metals:
Gold was flat in Asia.
Central bank and retail demand from China have supported gold prices, Saxo Markets said.
Heightened geopolitical risks and the market's expectations of low inflation to trigger a rate cut by the Fed may also make the safe-haven asset more appealing, ANZ said.
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Copper edged higher, hovering close to one-year-highs.
Trading for copper became cautious near the $9,500/ton threshold on Tuesday, said Sucden Financial.
However, Sucden Financial remains cautiously optimistic on the short-term outlook, supported by signs of improving macroeconomic conditions.
"We anticipate that any dips will be met with buying interest, nudging prices gradually upwards," it said.
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Iron ore prices were higher as a brighter demand outlook boosted investor sentiment.
Iron ore, which is used in building material, will likely benefit from China's busiest construction season in April and May, ANZ Research said.
Output from some blast furnaces is starting to pick up, while inventories at Chinese ports have also fallen slightly in recent weeks, it said.
Focus is on China's March trade data, due later this week, which includes iron-ore imports.
TODAY'S TOP HEADLINES
4 things Wall Street will watch for when the Fed releases minutes of March meeting
Three weeks ago, the Federal Reserve held its policy rate steady at 5.25%-5.5% for the fifth straight meeting, Economists saw Federal Reserve Chair Jerome Powell's news conference as dovish, helped by the Fed's projection that it was likely to cut rates three times this year. Going into the meeting, many economists had thought the Fed might reduce that projection to two moves.
In the past, the Fed has used the minutes to send messages to the market and so economist are always on their toes.
Hamas, Israel Remain Far Apart on Gaza Cease-Fire Deal
Israel and Hamas on Tuesday were considering a new U.S. proposal for a cease-fire in the war in Gaza and the freeing of some hostages still held by the militant group, but mediators cautioned that the two sides remained far from a deal.
The plan, presented by Central Intelligence Agency Director William Burns to officials from Israel, Hamas, Qatar and Egypt in Cairo on Sunday, calls for a six-week cease-fire in Gaza, which has faced an intense Israeli military campaign in the aftermath of Hamas's Oct. 7 attacks. During the pause in fighting, according to the plan, Hamas would release 40 of the more than 100 hostages the group is holding in the enclave in exchange for 900 Palestinian prisoners from Israel's jails, including 100 serving long sentences on terrorism-related charges.
Write to singaporeeditors@dowjones.com
Expected Major Events for Wednesday
04:30/NED: Feb Manufacturing output
05:00/FIN: Feb Industrial Production
06:00/SWE: Feb New orders & deliveries in industry
06:00/SWE: Feb Industrial Production Index
06:00/NOR: Mar PPI
06:00/NOR: Mar CPI
06:00/DEN: Mar CPI
07:00/AUT: Feb Production Index
07:00/SVK: Feb Industrial production
07:00/CZE: Mar CPI
07:00/CZE: Feb Import & export price indices
08:00/ITA: Feb Retail Sales
08:00/BUL: Feb Industrial Production
09:00/LUX: Feb Industrial Production
09:00/GRE: Feb Industrial Production Index
09:00/GRE: Mar CPI
10:00/POR: Mar CPI
15:59/UKR: Mar CPI
23:01/UK: Mar RICS Residential Market Survey
All times in GMT. Powered by Onclusive and Dow Jones.
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(END) Dow Jones Newswires
04-10-24 0023ET
