Morning Note: A summary of today's market news.

Market News

US equity markets drifted lower last night – S&P 500 (-0.1%), Nasdaq (-0.3%) – as investors await crucial US inflation data later today that may offer more clarity on the timing of the Federal Reserve’s interest rate cuts. The report is expected to show the first reading below 3% for year-over-year headline inflation since March 2021, supporting the disinflation narrative. The 10-year Treasury yield continued to nudge higher, to 4.18%. Gold trades at $2,024 an ounce, while Bitcoin traded above $50,000 for the first time since 2021 on ETF demand.

Nvidia briefly overtook Amazon as the fourth most valuable US company. Arm extended its three-day AI-propelled surge. This morning in Asia, Japan’s Nikkei 225 surged by 2.9% boosted by semiconductor and tech stocks. The Hang Seng and Shanghai Composite were both closed. The FTSE 100 is currently trading 0.1% lower at 7,566.

Sterling ticked higher to $1.2638 and €1.1738 following the release of jobs data. UK wage growth slowed by less than expected in Q4 – up 5.8% vs. 5.6% expected – underscoring the case for the Bank of England to wait before cutting interest rates. The unemployment rate was 3.8% vs. 4.0% expected. The 10-year Gilt year is currently 4.06%, well above the December low of 3.45%.

Brent moved up to $82.39 a barrel. US shale oil output is forecast to rise to 9.72m barrels a day next month, up 0.2% from February, the EIA said. That’s a deceleration from last year’s average growth of 0.9%. 

US demand for annuities is soaring and it’s powering the rally in credit markets. Last year, annuity sales rose 23% to a record $385bn, with savers seeking to lock in higher interest rates.

New Delhi is on high alert ahead of expected protests by farmers to demand guaranteed minimum crop prices. Meanwhile, Western Australia’s grain production plunged 50% to 14.5mt in 2023 compared with the year before.

Source: Bloomberg