Stocks Hit for a Second Day – Nasdaq down 1%.
US Stocks experienced a second day of losses after poor Salesforce forecasts and weak US data weighed on markets. The Dow closed down 0.86%, the S&P dropped 0.86% and the Nasdaq lost 1.08% as Salesforce shares crashed 20% on the day. US Treasury yields dropped back from recent highs, the 2-year losing 5.4 basis points to trade back to 4.931% and the 10-year falling 6.8 basis points to 4.556%. The dollar dropped later in the day, the index losing 0.37% on the day. Oil prices took another beating as US inventories came in higher-than-expected Brent losing 2.1% down to $81.86 per barrel and WTI off 1.7% to $77.91 per barrel and Gold rose 0.2% on the back of the weaker dollar to close the NY session at $2,344 per ounce.
US Inflation Data in Focus Today
Investors have been waiting all week for the key US inflation number due out later today. The PCE Price Index is well touted as the Fed’s favoured inflation indicator and traders are expecting to see volatility around the event, especially if we get a print substantially off the expected 0.3% increase. Fed member comments have been largely on the hawkish side of the argument recently and a higher print tonight would back up the ‘higher for longer’ rate call and could send stock markets into a sharp correction. A lower print, which is what most investors are hoping and praying for would push the argument again for faster cuts from the Fed and should see a decent relief rally. The market is currently pricing in just a 0.5% variance for at-the-money options, but many traders think that we could see bigger moves in the New York session today, especially if the number is off expectations.
Action in all the Sessions for Traders Today
Asian markets are set to open on the back foot again today after Wall Street saw more downside in the trading day yesterday. The early focus in APAC will be on Japan with the latest Tokyo Core CPI numbers due out, however, this is likely to be superseded by key Chinese numbers later in the day with the Manufacturing and Non-Manufacturing PMI data due out. The London session has key inflation data out again in the form of the Eurozone CPI Flash estimates and we should see volatility in the Euro around the release. The main event of the day of course comes in the New York session with the release of the Core PCE Price Index and traders are expecting the market to be reacting to this update for most of the session. The Canadian GDP number will be released at the same time and the Chicago PMI data is out later, although expect those numbers to be largely superseded by the PCE release.
