Stocks await US triple-data release

Global shares held close to record levels on Thursday, while the dollar was on track for its first weekly increase in a month. Investors awaited a trio of U.S. data releases that could influence interest rate expectations.

Earlier this week, U.S. consumer inflation data indicated that price pressures accelerated more rapidly than anticipated in February.

With the next Federal Reserve meeting less than a week away, investors maintain the belief that the central bank will proceed with rate cuts around three times this year.

The Bank of Japan also convenes next week. Officials, including Governor Kazuo Ueda, have attempted to moderate expectations of an immediate departure from negative interest rates. Consequently, this has set the yen on track for its weakest weekly performance in a month.

The MSCI All-World index was recently up by 0.1% at 776, following its record high of 778.13 reached last week.

On Thursday, investors will have access to U.S. wholesale inflation, consumer spending, and weekly jobless claims data, all of which could provide insights into the Federal Reserve’s three primary areas of focus: growth, price pressures, and the labor market.

“The market needs the current story to continue, and the current story is one of a relative soft landing, which is an acceptable level of economic activity that is non-inflationary,” said chief economist at Lombard Odier, Samy Chaar.

“What has been holding the global economy together has been the health of the U.S. consumer, and you don’t want to be in an environment where there are some weak signs in the labour market and therefore in consumption patterns and you start to get on the weak side of core growth, so that is something we’ll be monitoring,” he noted.

Alongside retail sales figures, which fell short of expectations last month, producer price data, influencing the core personal consumption expenditures price index (PCE), and initial weekly jobless claims are also scheduled for release.

“With payroll growth still solid and inflation proving to be a bit stickier recently, we suspect the FOMC (Federal Open Market Committee) will still be seeking greater confidence at the end of its meeting next week that inflation is headed back to 2% on a durable basis,” noted economists at Wells Fargo in a client note.

S&P 500 and Nasdaq futures climbed 0.3% and 0.4% respectively, with attention likely to turn to technology stocks following an optimistic outlook from Apple (NASDAQ:AAPL) supplier Foxconn for 2024, following its better-than-expected profits in the fourth quarter.

In Europe, the STOXX 600 (STOXX) increased by 0.34%.

Meanwhile, the dollar edged up by 0.1% to 102.84, on track for its first weekly gain in a month, as it rebounded from recent lows.

The euro (EUR=EBS) dipped by 0.1% to $1.094 but remained close to two-month highs. Meanwhile, the yen stabilized, leaving the dollar unchanged on the day at 147.73. However, the dollar is still poised for a 0.5% increase against the Japanese currency, marking its most significant weekly gain in a month.

Investors have been increasingly factoring in the possibility of a policy change this month, especially following reports of substantial pay increases from major Japanese companies during this year’s annual wage negotiations.

Earlier this week, Ueda highlighted that wage growth was pivotal in determining the timing of any monetary policy adjustments. However, he also acknowledged that the economy was exhibiting some signs of weakness.

A preliminary survey on wage negotiations at major firms is scheduled for release on Friday. BOJ policymakers have emphasized that these negotiations are crucial in determining the timing of the central bank’s stimulus withdrawal.

In commodities, Brent crude increased by 0.7% to $84.64 per barrel.

On Thursday, the International Energy Agency raised its forecast for demand growth in 2024. However, it noted that a slowing global economy would pose a challenge to oil consumption.

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