Investors are getting fearful of more hawkish signals from the Federal Reserve
US stock markets fell on Thursday to snap a three-day winning streak as investors were spooked by stronger-than-expected US inflation data. February’s PPI rose 0.6% versus the expected gain of just 0.3%. Core producer price index climbed 0.3% in February versus a 0.2% expected. The reading came on the heels of a strong consumer inflation report earlier this week. The Dow Jones pulled back 0.35%, the Nasdaq Composite fell 0.3%, while the S&P 500 slipped 0.29%. In individual stocks, Robinhood rallied 5% after the company reported a 16% increase in assets under custody in February. Shares of Nvidia stayed under pressure to shed more than 3% overnight.
As fresh US inflation data spurred more concerns over higher-for-longer interest rates, Asian stocks fell sharply on Friday. Now, investors are getting fearful of more hawkish signals from a Federal Reserve meeting next week. Japan’s Nikkei 225 index fell 0.33% and was set for a 2.3% weekly decline ahead of the upcoming Bank of Japan meeting due next week. After hitting a record high earlier in the week, Australia’s ASX 200 slid 0.56% amid the ongoing profit-taking ahead of a Reserve Bank of Australia meeting next week.
In Europe, markets opened mixed on Friday as investors digested US inflation data. The pan-European Stoxx 600 traded flat during early morning deals, struggling for direction ahead of the weekend as risk appetite remains more muted so far today. Similarly, US stock index futures are rather flattish on the day. The DAX 30 and CAC 40 are just slightly off record highs with the former up 0.7% on the week and the latter up 1.8%.
The hot US inflation report sent bond yields higher along with the US dollar. The USD index bounced strongly during the previous session to finally regain the 103.00 figure. Earlier on Friday, the greenback extended gains towards the 103.50 zone that capped gains. During the European session, the US currency holds slightly above the flat-line, deciding on the further direction. Buyers could be indecisive in the near term in anticipation of next week’s Fed meeting. Should the central bank deliver a more hawkish tone than expected, the dollar may rally across the board.