FTSE 100 Remains Under Pressure
Equities in London dropped for a second consecutive session on Wednesday, with the blue-chip FTSE 100 closing around the 7,760 mark, as losses among healthcare and materials offset gains in real estate. All eyes are on the US Federal Reserve’s interest rate decision to be announced later today, with markets expecting the world’s most influential central bank to deliver a 25 bps hike. Domestically, the Bank of England will likely increase interest rates by 50 bps to 4.0% on Thursday to tackle double-digit inflation. AstraZeneca and giant miner Anglo American were among the biggest laggards on the index, down 2.9% and 2.3%, respectively. Vodafone also tumbled over 2% after reporting a slowdown in its group service revenue growth.
French Stocks End on Cautious Note
The CAC 40 index closed marginally lower at 7,077 on Wednesday, tracking a general cautious mood ahead of crucial monetary decisions from the Federal Reserve, the ECB and the BoE. Meanwhile, traders digested another batch of corporate earnings and a raft of economic data from Europe and the US. While there were signs of receding inflationary pressures in the eurozone and the US, the latest PMI reports indicated that manufacturing activity across major economies remains fragile. On the domestic front, factory activity in France returned to growth in January albeit not as strongly as initially forecast. Among single stocks, top gainers were Renault (+3.1%), Publicis Groupe (+2.8%), STMicroelectronics (+2.7%) and Teleperformance (+2.2%); while the main draggers were TotalEnergies (-1.8%), L’Oreal (-1.5%) and Unibail-Rodamco (-1.5%).
Italian Shares Extend Gains
The FTSE MIB index closed 0.4% higher at 26,700 on Wednesday, the highest in nearly one year, with support from financial stocks as investors digested a batch of economic data and corporate results ahead of the Fed decision after the closing bell. Inflation in Italy fell sharply in January, but domestic and Eurozone core readings came at record highs to underscore that price growth remains in an unsustainable trend. Also, domestic PMI data showed that Italy’s factory activity rebounded in January after seven months of contraction. Milan’s heavy-weight banking sector led the gains for a second session on the corporate front, carried by UniCredit’s strong results yesterday. To add, BPER Banca added more than 3% following the recommendation from UBS.
European Stocks Tread Water
European equity markets were little changed on Wednesday, as investors digested a batch of economic data and corporate news ahead of the much-anticipated policy decision by the Federal Reserve later in the day. US policymakers are seen delivering a smaller 25bps rate hike amid signs of cooling inflation, while investors will be looking for guidance on the path of future interest rate rises. On the data front, the Eurozone’s inflation rate slowed more then expected in January to an eight-month low of 8.5%, while the core index held at an all-time high of 5.2%, bolstering expectations that the ECB will maintain its hawkish rhetoric in the near term. On the corporate front, drugmaker Novo Nordisk posted strong 2023 sales growth expectations and Novartis predicted that core operating income would grow in a “mid single digit” percentage range in 2023. Among other stocks, BMW raised suggested retail prices for some models sold in China due to higher raw material and logistics costs globally.
United States Job Quits Rate
Job Quits Rate in the United States remained unchanged at 2.70 percent in December from 2.70 percent in November of 2022. Job Quits Rate in the United States averaged 1.99 Percent from 2000 until 2022, reaching an all time high of 3 Percent in September of 2021 and a record low of 1.20 Percent in August of 2009. Job quits are voluntary separations by employees (except for retirements, which are reported as other separations). The quits rate is computed by dividing the number of quits by employment and multiplying that quotient by 100. This page includes a chart with historical data for the United States Job Quits Rate.
U.S. Dollar Declines On Weak ADP Data; Fed Decision In Focus
The U.S. dollar fell against its major counterparts in the New York session on Wednesday, as the nation’s private sector job growth slowed more than expected in January and investors awaited the Federal Reserve’s policy decision for more signals on future rate hike path.
🔥HIGH IMPORTANCE🔥
🚀20:00 USD Fed Interest Rate Decision
👉4.50% Previous
👉4.75% Forecast
🧾20:00 USD FOMC Statement
🧾20:30 USD FOMC Press Conference
Fed Delivers Smaller 25bps Hike
The Federal Reserve raised the target range for the fed funds rate by 25bps to 4.5%-4.75% in its February 2023 meeting, dialing back the size of the increase for a second straight meeting, but still pushing borrowing costs to the highest since 2007. The decision came in line with market expectations. Policymakers added that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2%. During the regular press conference, Chair Powell reinforced the disinflation process is on an early stage and that interest rates are not yet at a sufficiently restrictive level. In determining the size of future rate increases, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.
US Stocks Remain Under Pressure After Fed Decision
The Dow lost almost 400 points on Wednesday, while the S&P 500 and Nasdaq 100 were down 0.7% and 0.5%, respectively, after the Federal Reserve raised interest rates by 25 basis points to a range between 4.5% and 4.75%, bringing borrowing costs to their highest since 2007. Investors are now waiting for the Fed Chair Powell press conference for clues about the path of interest rates amid growing speculation that the central bank could pause rate hikes after their March meeting as inflation cooled and the economy slowed. Worries that such tightening raises the odds of a recession became more pronounced after ISM data showed American manufacturing contracted for a fifth consecutive month in January. On the corporate front, Snap dipped over 10% after the social-media company cautioned that sales in the current quarter would likely decline while reporting a wider-than-expected loss.
DXY Holds Below 102
The dollar index pared losses but held below 102 on Wednesday, remaining close to low levels not seen since June last year, after the Fed raised rates by only 25bps as expected, but reinforced that ongoing rate increases will be appropriate.
UAE Hikes Interest Rates by 25bps
The Central Bank of the United Arab Emirates increased the base rate of its overnight deposit facility by 25 bps to 4.64% in its January meeting, tracking the increase in the US federal funds rate, as the Emirati Dirham is pegged to the dollar.
Gold Prices Little Changed after Fed
Gold prices were little changed around $1925 an ounce on Wednesday, after the Federal Reserve delivered a smaller 25bps hike as expected although policymakers reiterated more rate hikes to come, pushing back against investor expectations that an end to the current tightening cycle would be soon. Traders now await monetary policy decisions from both the BoE and the ECB due tomorrow, with the latter set to maintain a hawkish stance.
Euro Edges Higher after Fed, ECB Eyed
The euro extended gains to $1.09 on Wednesday, remaining close to levels not seen since April last year, benefitting from a softer dollar as the Fed continued to dial back the size of the interest rate increases as expected. At the same time, investors bet the ECB will maintain a hawkish rhetoric and deliver a 50bps rate hike tomorrow although attention will turn mainly to the central bank’s plans for the March meeting, with markets seeing another half-percent hike. On the data front, Eurozone inflation rate slowed more than expected to 8.5% in January, the lowest since last May, while the core rate held at an all-time high of 5.2%. Still, the data did not include inflation figures for Germany – the bloc’s biggest economy.
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