Market Overview: Global Stocks Surge, U.S. Economic Data Mixed
A Confusing Mix of Market Conditions
A confusing mix of red hot stock markets, chilly U.S. economic updates, and hawkish Federal Reserve noises make for a foggy end to the week. U.S. producer inflation numbers are in focus, with major stock indexes showing little doubt about the direction of travel.
Global Stocks Hit Two-Year Highs
Global stocks hit two-year highs as the Nikkei soared again to within a hair’s breadth of the record set at the height of Japan’s property bubble in 1990. Meanwhile, Hong Kong’s beaten-down market rallied more than 2% ahead of China’s post-New Year reopening next week.
Bank of Japan’s Stance
The Bank of Japan is on track to end negative interest rates in coming months, with only wages growth needing assessment before it acts. The yen slipped back lower, and foreign investors increased purchases of Japanese stocks by a net 817.43 billion yen in the biggest inflow since Jan. 12.
U.S. Economic Performance and Inflation Concerns
U.S. economic performance in 2024 leaned heavily to the cooler side of things, as frigid weather during January depressed retail sales and industrial production. With producer price report now top of the radar, bond markets are wary of a sticky surprise akin to the consumer price report earlier this week.
Fed’s Cautious Tone
Fed officials are sounding wary despite the seemingly soft January economic readouts. Atlanta Fed boss Raphael Bostic said the central bank was not ready yet to start easing, emphasizing the chance to execute policy decisions without oppressive urgency.
Nvidia’s Growing Influence
Shares of smaller AI firms rallied again after Nvidia disclosed stakes in them, offering clues on its growth strategy. The rally showed Nvidia’s growing influence in the AI world, as its market value grows at a scorching pace, making it the third most valuable U.S. company.
Global Interest Rate Picture
European Central Bank officials sounded more dovish, with compelling reasons why the ECB should not hold off for too long on rate cuts. In the UK, a slightly dizzying week for British rates markets unfolded, with the looming election also coming onto the radar.
U.S. Market Expectations
U.S. stock futures continue to push higher, eyeing new historic peaks at the open. Key diary items that may provide direction to U.S. markets later on Friday include US Jan producer price inflation, housing starts/permits, University of Michigan Feb household sentiment survey, and speeches from several Fed officials.
By Mike Dolan, editing by Hugh Lawson; [email protected]
