U.S. index futures are indicating a positive start for Wednesday, with the market set to rebound after two days of declines. This uptick follows the release of consumer price inflation figures, which aligned with economists' predictions.
The Consumer Price Index (CPI), reported by the Labor Department, rose by 0.3% in November, following consistent 0.2% increases over the previous four months, as expected. Annually, consumer prices grew by 2.7% in November, slightly up from October's 2.6%, matching forecasts. Excluding food and energy, core prices also registered a 0.3% increase, consistent with recent months and expectations. Year-over-year, November's core prices were up 3.3%, unchanged from October and aligning with estimates.
With the data in line with forecasts, confidence is growing that the Federal Reserve will proceed with a quarter-point interest rate cut at their upcoming meeting. According to the CME Group's FedWatch Tool, there is a 96.7% probability of a 25 basis point cut at the December meeting. However, there is also a 76.7% chance of leaving rates unchanged in the subsequent late January meeting.
Tuesday's trading saw stocks retreating further from last Friday's record highs. The Dow fell by 154.10 points (0.4%) to 44,247.83, while the Nasdaq dropped 49.45 points (0.3%) to 19,687.24, and the S&P 500 declined 17.94 points (0.3%) to 6,034.91. This downturn was attributed to profit-taking ahead of Wednesday's CPI report.
As noted by Danni Hewson, head of financial analysis at AJ Bell, the anticipated "Santa rally" has been elusive, with Wall Street preoccupied with the inflation data. Significant declines were observed in computer hardware stocks, with the NYSE Arca Computer Hardware Index plummeting 3.8%. Semiconductor and housing stocks also experienced notable weakness, as evidenced by the respective declines in the Philadelphia Semiconductor and Housing Sector Indices.
Conversely, airline stocks registered gains, propelled by Alaska Air Group's (ALK) upward revision of its fourth-quarter profit forecast, which sent its shares soaring by 13.2%.
In commodities, crude oil futures increased by $0.85 to $69.44 a barrel, following a $0.22 rise to $68.59 on Tuesday. Gold is trading at $2,725.50 per ounce, up $7.10 from the previous closing price of $2,718.40. On Tuesday, gold surged by $32.60.
In currency markets, the U.S. dollar stands at 152.25 yen, rising from 151.95 yen in Tuesday's New York session. Against the euro, it is trading at $1.0516 compared to $1.0527 the previous day.
In Asia, stocks delivered a mixed performance on Wednesday as traders awaited the U.S. inflation data, which could impact the Fed's interest rate actions next week. Currently, there's an 85% expectation for a quarter-point reduction. Investors are also focused on China's Central Economic Work Conference, which is anticipated to outline next year's policies.
The Japanese yen rebounded against the dollar after data revealed a surge in Japan's corporate goods price inflation, the quickest in 16 months, pressuring the Bank of Japan to consider another rate hike. Gold held near a two-week high in Asian trading, and oil prices edged higher amidst geopolitical tensions.
China's Shanghai Composite Index climbed 0.3% to 3,432.49, following President Xi Jinping's assurances of meeting the nation's economic growth targets for the year.**Asia Markets Overview**
Hong Kong's Hang Seng Index slid 0.8% to 20,155.05, reversing initial gains as Chinese leaders gathered in Beijing for their annual planning session to outline economic policies and growth targets for the upcoming year.
In Japan, markets closed relatively unchanged amid speculation over when the Bank of Japan might increase interest rates. The Nikkei 225 Index edged slightly higher to 39,372.23, with investors poised for the Bank of Japan's policy meeting next week. Meanwhile, the broader Topix Index increased by 0.3% to 2,749.31.
Nippon Steel Corp. saw a 0.6% uptick following reports that the Biden administration would halt its planned acquisition of U.S. Steel due to national security concerns.
South Korean stocks experienced a second consecutive day of gains, buoyed by data indicating an addition of over 120,000 jobs in November, slightly up from the previous month. The Kospi rose 1.0% to 2,442.51, led by sectors such as shipbuilding, finance, defense equipment, and internet-related stocks.
Australian markets fell ahead of the release of domestic employment data scheduled for Thursday. The benchmark S&P/ASX 200 Index dropped by 0.5% to 8,353.60, hitting its lowest point since November 26. The broader All Ordinaries Index also fell 0.5%, closing at 8,610.40.
In contrast, across the Tasman Sea, New Zealand’s benchmark S&P/NZX 50 Index rose by 0.3% to 12,761.19, breaking its three-day losing streak.
**European Market Update**
Following the end of an eight-session losing streak the previous day, European stocks continued their upward momentum on Wednesday as traders assessed U.S. inflation data. Simultaneously, anticipation builds over the European Central Bank's policy meeting and the results from China’s two-day Central Economic Work Conference, which is set to outline next year's policies.
In Europe, the German DAX Index ticked up by 0.1%, while both the UK’s FTSE 100 Index and France's CAC 40 Index advanced by 0.4%.
However, Inditex, the parent company of Zara, faced a notable downturn following unsatisfactory third-quarter sales results. Similarly, Siemens Energy saw a decline after cautious remarks from U.S. competitor GE Vernova regarding the struggling wind sector.
Adidas shares dipped after authorities conducted a raid on its German headquarters amid an ongoing tax investigation. Meanwhile, Zalando's stocks plunged after announcing a 1.1 billion euro acquisition of rival fashion company About You Holding, whose shares surged as a result.
TUI Group suffered despite reporting profit increases for the 2024 fiscal year and forecasting further growth into 2025. Conversely, RM Plc's shares soared in London as the educational technology and assessment solutions provider projected fiscal year-end results exceeding market expectations.
Tech group Cohort rallied after announcing a record performance for the first half of the year. Additionally, British American Tobacco shares rose following the reaffirmation of its 2024 guidance.
**U.S. Economic News**
In the U.S., the Labor Department released a pivotal report on Wednesday indicating that consumer prices rose in November, aligning with economists' predictions. The consumer price index increased by 0.3% in November after a consistent 0.2% rise over the previous four months, aligning with expectations. The annual growth rate of consumer prices edged up to 2.7% from October’s 2.6%, as anticipated.
When excluding food and energy costs, core consumer prices also rose by 0.3% in November, consistent with the previous three months and expectations. The core consumer prices in November surged by 3.3% year-over-year, identical to October’s figures and forecasts.
Furthermore, the Energy Information Administration is set to release its oil inventory report for the week ending December 6th at 10:30 am ET. Crude oil inventories are anticipated to decrease by 1.3 million barrels following a 5.1 million barrel drop in the preceding week.
Meanwhile, the Treasury Department plans to disclose the outcome of this month's auction of $39 billion in ten-year notes at 1 pm ET.
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