Global Markets News Round-up to start your day: 14/02/23

US inflation is expected to have accelerated in January to 0.5% month-on-month due to rising energy and services prices. 

The Japanese government nominated Kazuo Ueda as the next Bank of Japan chief, which could lead to the gradual reduction of monetary stimulus. However, the economy grew less than expected in the last quarter of 2022, providing evidence to keep stimulus measures for now. 

Credit Suisse notified some workers of a data breach involving the theft of their personal information by a former employee who had legitimate access to the data. 

Czech central bank governor Ales Michl is betting on stable interest rates and a strong koruna to tackle inflation, citing evidence that monetary policy is working. 

UK employment data are expected to show that the labor market is tight and wage pressure is persistent, which may put pressure on the Bank of England to tighten monetary policy. 

The North Atlantic Treaty Organization (NATO) may agree to spend at least 2% of its GDP on defense this summer, a shift from the alliance’s decade-old pledge to move toward the 2% guideline. 

US plans to sell 26 million barrels of crude oil from its Strategic Petroleum Reserve between April and June, as mandated by a 2015 budget requirement.

US Secretary of State Antony Blinken is considering a face-to-face meeting with China’s top diplomat, Wang Yi, at a security conference later this week, marking the first meeting between the two since a Chinese spy balloon allegedly hovered over US airspace. 

Investors are bracing for US inflation data, which will determine whether the bond markets or stock markets are correct in their signalling of the economy and future Federal Reserve policy. The S&P 500 has climbed nearly 1.5% over the past two weeks, while yields on two-year Treasuries have risen by more than 30 basis points as traders grow wary of the Fed’s hawkish messaging. 

Joe Biden is poised to announce the appointment of Lael Brainard as his top economic adviser, a move that places her alongside former Fed official Treasury Secretary Janet Yellen in the battle against inflation. 

European stocks are set for a muted open ahead of the US inflation data.

Markets yesterday:

Shares in Asia rose ahead of the release of key US inflation data, with indexes in Tokyo and Sydney leading the gains. 

However, futures for the S&P 500 and tech-heavy Nasdaq 100 slipped after strong gains on Monday. 

The yen also advanced after the formal nomination of Kazuo Ueda as the next Bank of Japan governor, with traders increasing bets that the bank’s yield-curve control and negative-rate policies may be abolished under Ueda’s leadership. 

Morgan Stanley strategists suggest that the possibility of a prolonged hiking cycle in Japan will be the swing factor for the market, while the Hong Kong Monetary Authority has bought the local currency for the first time since November to manage its peg to the dollar.

US inflation data is expected to show a likely acceleration in January to 0.5% from December’s 0.1%, while year-on-year estimates suggest a slowdown to 6.2% from 6.5%. Analysts suggest that a reading of 6.2% or lower is likely to see US equities extend their rally, while a reading of 6.5% or higher could result in a selloff and a higher dollar. 

However, JPMorgan Chase’s Marko Kolanovic has suggested that investors should be in bonds since “a recession is currently not priced into equity markets”, while Morgan Stanley’s Michael Wilson argues that US stocks are ripe for a selloff after prematurely pricing in a pause in Fed rate hikes.

Global indices at 6:30am UKT:

Dow Jones: 34,245.93 (+1.11%)

NASDAQ: 11,891.79 (+1.48%)

FTSE100: 7,947.60 (+0.83%)

CAC40: 7,208.59 (+1.11%)

Sensex: 60,831.90 (+0.66%)

Nifty50: 17,878.65 (+0.66%)

Nikkei225: 27,602.77 (+0.64%)

Disclaimer: The information provided in this summary is based on sources believed to be reliable and accurate. However, the accuracy and completeness of the information cannot be guaranteed. The opinions and views expressed in this summary are for informational purposes only and do not constitute investment advice. This summary should not be relied upon as the sole source of information when making investment decisions. Any decisions made based on information contained in this summary are the sole responsibility of the reader and may not be in the reader's best interest. The author and publisher assume no liability for any errors or omissions in this summary.
MSc Finance graduate from the London School of Economics and Political Science (LSE)
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Ria V Vaghela is an M&A Executive at RSM UK and an MSc Finance graduate from the London School of Economics and Political Science (LSE). She has worked at Jefferies, Dial Partners and 7i Capital prior to RSM UK gaining an experience of about 1.5 years. She has also worked as an Editor and Content Writer for The Representative Media. Apart from finance, she is interested in reading books on psychology and economics and also likes to paint and play lawn tennis

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