US equity markets were once again at the mercy of Energy stocks as all three major bourses closed lower on Tuesday despite macro data showing an uptick in inflation ahead of today’s meeting of the Federal Reserve.
Accendo Markets Analyst, Mike Van Dulken commented – “Despite some strength in General Retailers, the Dow Jones closed 0.2% lower with Chevron the biggest laggard on the index, while the S&P 500 underperformed on account of the aforementioned weakness in Energy names, down 0.3%.”
Before investors can begin to focus on this evening’s potentially rate-hiking Federal Reserve meeting, there’s plenty for investors to deal with.
Things start off this morning with the month’s UK jobs report, with wage growth once again in focus thanks to inflation’s recent climb.
Spreadex Analyst, Connor Campbell noted – “Worryingly the reading is set to drop from 2.6% to 2.4%, marking the second month of contraction. That news likely won’t be welcomed by the pound, especially since it has opened in a good mood, recovering 0.6% from the dollar (pushing it back above 1.22) and 0.3% from the euro. Elsewhere after January’s huge drop in claimant count change the figure is expected to have crept up by 3.2k in February, while the unemployment rate should remain unchanged at 4.8% for the 5 month in a row.”
Despite sterling’s own strong start the FTSE managed a 20 point increase after the bell, lifting it back to its regular 7370 perch.
In focus today
This evening’s Fed rate decision will claim top billing where markets are already factoring in another hike. We also have the build up to the Dutch General Election result in the early hours of tomorrow. Look out for any potential for confirmation of another populist, anti-immigration backlash in Europe.
Accendo Markets Analyst, Mike Van Dulken suggested – “This afternoon’s US Consumer Price Inflation (CPI) is the last inflationary offering for the Fed’s FOMC before it delivers a highly anticipated rate hike this evening. CPI is expected to show continued acceleration on an annual basis and even if the more crucial Core reading (ex-Food & Energy) ticks back from 5yr highs, it remains above the Fed’s 2% target.”
This morning, UK Unemployment is expected to remain at 4.8% for the fifth month in a row, although markets may instead focus on Weekly Earnings figures, given their importance to the Bank of England – January’s reading is expected to pull further back from November’s highest since late 2015.