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What’s happening: The Nasdaq 100 rose more than 1% on Wednesday, following the release of US inflation data.
What happened: The tech-laden index closed Wednesday’s session at its strongest intraday level in over eight months.
Google-parent Alphabet’s shares spiked following a major announcement, lending support to the Nasdaq.
Why it matters: The Labor Department said the US CPI (consumer price index) rose 4.9% year-over-year in April, versus market estimates of 5%. The easing of inflation increased speculations of the US Federal Reserve ending its rate hiking cycle.
Most traders expect the US central bank to keep interest rates unchanged at its June meeting, with less than a 5% chance of a hike by 25 basis points.
Alphabet’s stock gained 4.1% on Wednesday, after the company made several announcements around its advancements in AI for Google’s search engine and other products at its annual developer conference, Google I/O.
Shares of Apple and Microsoft also adding more than 1%, lending support to the Nasdaq 100.
Markets remained concerned about debt ceiling, after talks on increasing the $31.4 trillion debt ceiling ended on Tuesday with no deal. Biden and congressional leaders are scheduled to meet to discuss the issue on Friday.
The Dow Jones index fell 0.09% to close at 33,531.33 on Wednesday. Shares of regional banks extended losses from previous sessions on concerns around the health of the US banking sector.
The Nasdaq 100 jumped 1.11% to 13,347.83, while the S&P 500 added 0.45% to close at 4,137.64.
What to watch: Markets will continue monitoring the progress on debt talks. The release of data on US PPI and jobless claims will also remain in focus. US producer prices for final demand had eased by 0.5% in March and is projected to rise only 0.1% in April. The number of persons filing for jobless benefits, which increased by 13,000 to 242,000 in the week ended April 29, is expected to rise to 248,000 in the latest week.
Context: The GBP/EUR forex pair recorded gains on Wednesday, rising to a five-month high.
Details: The British currency has jumped about 22% from its record low of $1.0327 in September. The sterling has added around 4.6% in 2023.
Traders expect the Bank of England to continue raising its benchmark interest rate to combat inflation. Expert project the British central bank to take interest rates higher than 4.8% by its September.
The UK’s statistics agency recently said consumer prices in the country had surged 10.1% year-over-year in March. Although this is below February’s 10.4%, it is lower only marginally and remains in double digits.
The pound gained versus the euro on Wednesday. The EUR/GBP forex pair fell to 86.73 earlier in the session, the lowest reading since December 15, before settling at 87.01.
The GBP/USD forex pair settled at 1.2627 on Wednesday, down only slightly from the one-year high of 1.267 recorded on Monday.
Meanwhile, London stocks recorded losses on Wednesday, with the FTSE 100 down 0.29% to 7,741.33, following a 0.2% decline in the prior session.
What are expectations: Traders await the Bank of England’s interest rate decision today. The UK central bank had raised its key bank rate by 25bps to 4.25% at the March meeting and is expected to raise rates by another 25bps today.
Markets will also watch economic reports on GDP, balance of trade and industrial production, scheduled for release on Friday.
Other Markets: European indices closed lower on Wednesday, with the DAX 40, CAC 40 and STOXX Europe 600 Index down by 0.37%, 0.49% and 0.38%, respectively.
The US announced a fresh military aid package worth $1.2 billion for Ukraine. The news sent the safe-haven US dollar index slightly lower this morning.
The Philippine GDP expanded by 6.4% year-over-year in the first quarter, topping market expectations for 6.1% growth, which lent support to the PHP/USD forex pair.
China’s annual inflation rate eased to 0.1% in April, from 0.7% in the period month, and came in better than market expectations of 0.4%. Despite this, the CNY/USD pair trended lower in forex trading this morning.
Japan’s value of loans rose 3.2% year-over-year in April, following a 3% increase in the prior month, lending support to the JPY/USD forex pair.
Australia’s consumer inflation rose to 5.0% in May, from 4.6% a month ago, sending the AUD/USD pair lower in forex trading this morning.
Saudi Arabia’s industrial production, Turkey’s current account and foreign exchange reserves, South Africa’s mining production, gold production and industrial production, Russia’s total vehicle sales and monetary policy report, US continuing jobless claims and natural gas stocks change, as well as China’s total vehicle sales.
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