Fears of a recession weighed on Wall Street, even if the inflation data released today came out colder than expected.

Asian stock markets followed Wall Street on Thursday morning and weakened as the March FOMC minutes revealed the Federal Reserve’s bias towards another Rate hike next month. Also, China’s macro data is currently lackluster. The Nikkei rose 0.27%, Hong Kong lost 0.4%, and Shanghai underperformed.
US WTI oil rose 0.3% to $83 a barrel.

The yield on the US 10-year bond rose from 3.38% at the start of the Asian session to 3.41%.
Nasdaq futures were up about 0.20% during the morning.

The International Monetary Fund lowered its global economic growth forecasts for 2023 and 2024 due to several factors, including rising interest rates, recent banking woes, and the ongoing conflict in Ukraine.

The organization now forecasts growth of 2.8% in 2023 and 3% in 2024, up from previous estimates of 2.9% and 3.1%, respectively. Furthermore, the IMF expects the global size to fall to 7% over the next year, mainly due to falling commodity prices but warns that the underlying size could decline at a slower pace.

The minutes of the Federal Reserve’s March policy meeting were released Wednesday. They revealed concerns that the economy could slip into a mild recession towards the end of the year due to the impact of the US banking crisis.

Meanwhile, the consumer price index rose 0.1% in March, slightly less than the 0.2% increase expected by economists polled by Dow Jones. This report could influence the Federal Reserve’s interest rate decision in May and further support the case that the central bank’s rate hikes have stopped, even though being still up 5% year-on-year.

Following the release of cooler-than-expected March inflation data, stock futures immediately soared ahead of the market open: Dow Futures contract was up 0.7%, S&P 500 Futures contract were up 0.8% higher, and the Nasdaq 100 Futures traded 1.1% higher.

In March, economists had forecast a 0.3% rise in the consumer price index (CPI). However, the annual CPI inflation rate was expected to fall to 5.2% from 6% the previous month. Meanwhile, excluding food and energy, core CPI was estimated to rise 0.4% in March. As a result, the core CPI rate of increase is expected to increase slightly to 5.6% from 5.5% in February.

Inflation rates are declining year-on-year, which can be attributed to the high prices recorded in early 2022. This will make it challenging to reduce inflation rates over the year due to smoother year-on-year comparisons. Furthermore, economic indicators, such as employment data, are weakening, while the banking problems impact loans.

Investors anticipate the Fed possibly making another rate hike in May but speculate it could be the last.
The upcoming first-quarter earnings season will be a testing ground for the US economy and consumers, and this week marks the beginning of it.

Some central banking players, such as JPMorgan Chase, Citigroup, Well Fargo, and healthcare giant UnitedHealth, are expected to present their results.

Price lists for Wednesday, 12 April 2023
DOW Jones -0.11% to 33,646.50
S&P 500 -0.41% to 4,091.95
NASDAQ 100 -0.85% to 11,929.34

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