PCE report will set fresh direction for stocks and currencies this week
After hitting record highs ahead of the weekend due to Nvidia’s strong earnings, Wall Street stocks drifted lower on Monday as investors shifted focus to key US economic data due this week. Apart from GDP, personal income/spending and durable orders data, market participants are looking ahead to the monthly personal consumption expenditures price index, the Fed’s favored inflation gauge. The S&P 500 slipped 0.38% overnight, the Dow Jones shed 0.16%, and the Nasdaq Composite gave up declined 0.13%.
Even as US stocks edged back from their record highs, Asian equities were mixed-to-higher on Tuesday. Tokyo’s Nikkei 225 added 0.17% after the Japanese government reported that consumer prices rose 2.2% last month from the year before to come in slightly stronger than expected. In China, the Shanghai Composite index gained 1.29%, with investors awaiting signs of actual improvement in the economy after additional stimulus measures from Beijing. Elsewhere, South Korean Kospi shed 0.83% and the Hang Seng in Hong Kong rallied nearly 1% to erase early losses.
In Europe, stocks were little changed at the start of the session, with US stock index futures looking flattish in early pre-market deals as well. In individual stocks, shares of Abrdn were up nearly 5% after the investment company reported a 5% fall in adjusted operating profit and provided further details of its plans to cut costs. On the data front, the BRC reported that inflation in UK retail slowed to 2.5% in February, the lowest rate since March 2022. London’s FTSE 100 was less than 0.1% higher in early deals.
Meanwhile, the US dollar keeps retreating gradually after a failure to hold above the 104.00 figure late last week. The greenback is slightly pressured by a cautious tone among traders in anticipation of key economic data out of the United States. Also, the dollar struggles amid lower yields. 10-year Treasury yields are down 3 bps to 4.267% on the day after yesterday’s modest climb t0 4.276%. However, should the upcoming data surprise to the upside, the buck may bounce across the board as Fed rate cut expectations will continue to wane.