Futures Pointing To Continued Strength On Wall Street

The major U.S. index futures are currently pointing to a higher open on Friday, with stocks likely to extend the strong upward move seen over the two previous sessions.

The upward momentum on Wall Street comes following the release of a report from the Commerce Department showing an unexpected slowdown in the annual rate of growth by core consumer prices in the U.S.

The report said core consumer prices, which exclude food and energy prices, jumped 4.6 percent year-over-year in February.

Annual price growth remains elevated, but this represents a slowdown from the 4.7 percent year-over-year spike in January. Economists had expected the pace of growth to be unchanged.

With the inflation reading said to be preferred by the Federal Reserve, the data may lead to optimism the central bank will hold off on raising interest rates at its next meeting in early May.

CME Group’s FedWatch Tool is currently indicating a 49.2 percent chance the Fed will leave rates unchanged and a 50.8 percent chance of a 25 basis point rate hike.

The Fed signaled last week that it expects just one more rate increase this year, leaving traders looking for clues about the timing of the final rate hike.

Stocks moved mostly higher during trading on Thursday, adding to the strong gains posted in Wednesday’s session. With the continued upward move, the Nasdaq and the S&P 500 reached their best closing levels in over a month.

The major averages gave back ground after an early advance but moved back to the upside as the day progressed. The Nasdaq advanced 87.24 points or 0.7 percent to 12,013.47, the S&P 500 climbed 23.02 points or 0.6 percent to 4,050.83 and the Dow rose 141.43 points or 0.4 percent to 32,859.03.

The continued strength on Wall Street came as concerns about turmoil in the banking sector continued to ease after sparking substantial volatility on Wall Street in recent weeks.

A lack of major negative developments regarding the banking industry in recent days has led to confidence the situation has stabilized.

On the economic front, the Labor Department released a report showing a modest increase in first-time claims for U.S. unemployment benefits in the week ended March 25th.

The report said initial jobless claims rose to 198,000, an increase of 7,000 from the previous week’s unrevised level of 191,000. Economists had expected jobless claims to inch up to 196,000.

A separate report released by the Commerce Department showed the U.S. economy grew by slightly less than previously estimated in the fourth quarter of 2022.

The report said real gross domestic product shot up by 2.6 percent in the fourth quarter compared to the previously reported 2.7 percent jump. Economists had expected the pace of growth to be unrevised.

The Commerce Department said the slower than previously estimated growth reflected downward revisions to exports and consumer spending.

Airline stocks turned in some of the market’s best performances on the day, driving the NYSE Arca Airline Index up by 1.8 percent.

Significant strength was also visible among semiconductor stocks, as reflected by the 1.6 percent gain posted by the Philadelphia Semiconductor Index. The index reached its best closing level in almost a year.

Gold stocks also saw considerable strength amid an increase by the price of the precious metal, resulting in a 1.6 percent advance by the NYSE Arca Gold Bugs Index.

Tobacco, steel and tobacco stocks also showed notable moves to the upside, while banking and oil service stocks gave back ground.

Commodity, Currency Markets

Crude oil futures are rising $0.52 to $74.89 a barrel after jumping $1.40 to $74.37 a barrel on Thursday. Meanwhile, after climbing $13.20 to $1,997.70 an ounce in the previous session, gold futures are inching up $6.20 to $2,003.90 an ounce.

On the currency front, the U.S. dollar is trading at 132.92 yen versus the 132.70 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0886 compared to yesterday’s $1.0905.

Asia

Asian stocks followed Wall Street higher on Friday, with easing concerns about the global banking system as well as strong readings on Chinese manufacturing, services and construction activity helping boost investor sentiment.

The upside, however, was capped by tough talk by Federal Reserve officials on the interest rate outlook. Key U.S. inflation data due later in the day is expected to provide additional clues on the Fed’s monetary policy path.

A softer inflation reading may prompt Fed officials to postpone plans for a possible rate hike at the next FOMC meeting in early May.

The dollar headed for a second consecutive quarterly loss, while oil and gold prices were slightly lower in Asian trading.

Chinese and Hong Kong stocks advanced on optimism surrounding China’s economic recovery. China’s Shanghai Composite Index rose 0.4 percent to 3,272.86, while Hong Kong’s Hang Seng Index added 0.5 percent to settle at 20,400.11.

Official data showed Chinese manufacturing activity rose at a slower pace in March but still exceeded expectations. Services activity expanded at the fastest pace in nearly 12 years and construction activity remained strong, boosting the outlook for growth this year.

Japanese shares rose sharply as investors cheered a weaker yen and strong readings on industrial output and retail sales for February.

The Nikkei 225 Index jumped 0.9 percent to 28,041.48 and gained 2.4 percent for the week, marking its best weekly gain in two months. The broader Topix ended 1.0 percent higher at 2,003.50.

Automakers topped the gainers list, while shares of shipping firms extended declines for a second day on going ex-dividend.

Toyota Motor rose over 2 percent after its global sales hit a record for the month of February. Mitsui & Co soared 7.6 percent on a Nikkei report that the trading company is considering raising its total return ratio.

Seoul stocks rallied even as the latest factory output and retail sales figures signaled an uneven economic recovery. The Kospi shot up 1.0 percent to 2,476.86 on hopes for a turnaround in the global semiconductor industry.

Australian markets ended the March quarter on an upbeat note as fears of a global banking crisis receded. The benchmark S&P/ASX 200 Index climbed 0.8 percent to 7,177.80 and ended the week up more than 3 percent.

The broader All Ordinaries Index settled 0.8 percent higher at 7,373.30 after strong gains in U.S. stocks overnight.

Miners led the surge, with Fortescue Metals Group spiking 4.1 percent. EML Payments soared 31 percent despite news that its Irish subsidiary has copped a nil percent growth cap for the next 12 months.

Europe

European stocks have moved higher on Friday after data showed Eurozone inflation has fallen sharply from 8.5 percent to 6.9 percent to reach its lowest level for a year in March following a decline in energy costs.

The region’s jobless rate held steady at a record low of 6.6 percent in February, while German retail sales unexpectedly fell by 1.3 percent in real terms in February compared to the previous month, separate reports showed.

Elsewhere, data showed Britain’s economy grew modestly at the end of 2022 to avoid a technical recession.

While the French CAC 40 Index has increased by 0.6 percent, the German DAX Index is up by 0.4 percent and the U.K.’s FTSE 100 Index is up by 0.4 percent.

ArcelorMittal has edged up slightly in Amsterdam. The company said its Indian steelmaking joint venture with Asian peer Nippon Steel Corp. has entered into a $5 billion loan deal with a consortium of Japanese lenders.

3i Infrastructure has also moved to the upside after reporting half-yearly income in line with expectations.

Meanwhile, wind turbine manufacturer Nordex has tumbled after posting a wider loss for 2022. Funeral service provider Dignity has also fallen in London after posting a full-year loss.

Sartorius has plunged after the German pharmaceutical and laboratory equipment supplier announced its acquisition of Polyplus for about 2.4 billion euros.

U.S. Economic Reports

Core consumer price growth in the U.S. unexpectedly slowed in the month of February, according to a report released by the Commerce Department on Friday.

The report said core consumer prices, which exclude food and energy prices, jumped 4.6 percent year-over-year in February.

Annual price growth remains elevated, but this represents a slowdown from the 4.7 percent year-over-year spike in January. Economists had expected the pace of growth to be unchanged.

The inflation reading, which is said to be preferred by the Federal Reserve, was included in the Commerce Department’s report on personal income and spending in February.

The Commerce Department said personal income rose by 0.3 percent in February after climbing by 0.6 percent in January. Economists had expected personal income to increase by 0.4 percent.

Meanwhile, the report said personal spending edged up by 0.2 percent in February after surging by an upwardly revised 2.0 percent in January.

Economists had expected personal spending to rise by 0.3 percent compared to the 1.8 percent jump originally reported for the previous month.

At 9:45 am ET, MNI Indicators is scheduled to release its report on Chicago-area business activity in the month of March. The Chicago business barometer is expected to edge down to 43.4 in March from 43.6 in February, with a reading below 50 indicating a contraction.

The University of Michigan is due to release its revised reading on consumer sentiment in the month of March at 10 am ET. The consumer sentiment index is expected to be downwardly revised to 63.2 from 63.4, which was down from 67.0 in February.

At 3:05 pm ET, New York Federal Reserve President John Williams is scheduled to speak and participate in a moderated discussion covering the economic outlook and monetary policy at an event hosted by Housatonic Community College.

Federal Reserve Board Governor Lisa Cook is due to speak on the U.S. economic outlook and monetary policy before the 2023 Midwest Economics Association 87th Annual Meeting at 5:45 pm ET.