Market News & Analysis
Investors eye Spring Statement and US Inflation numbers
Fiona Cincotta March 13, 2018 9:51 AM
The FTSE is trading mildly lower as it traces losses from Asia and weak sentiment from Wall Street.
Whilst the Dow and the S&P 500 ended the overnight session in negative territory, the Nasdaq extended its rally reaching fresh intra day and closing highs, boosted by a surge in demand for tech stocks.
Trump’s steel and aluminium tariffs continue to weigh on heavyweight industrials and trade war fears in general kept sentiment weak, tech stocks have bounded higher, up 10% since the beginning of the year.
Spring Statement – what to watch
This morning we are seeing subdued trading, with no high impacting economic data to inspire traders early on. As a result, market participants are likely to at least cast an eye towards Philip Hammond’s Spring Statement, even if it is expected to be a bland affair.
With no tax or spending announcements, the potentially most interesting area to watch will be the updated OBR economic and public spending forecasts. These figures could provide some volatility for pound; however, this could be minimal as no major surprises are expected.
UK GDP is expected to come in at 1.7% marginally higher that the 1.5% forecast by the OBR back in the Autumn. Public spending is expected to have fallen to around £43 billion as Hammond will have to fight off calls to rack up spending to help Britain through Brexit.
US inflation under the spotlight
US inflation is back on the radar this Tuesday, as investors look towards US CPI data. The mood in the market is quite different today to January’s CPI release. Just prior to the January release the jobs report had shown a sudden, sharp uptick in wage growth, which ignited concerns that the Fed would need to increase the pace at which it would hike rates through the year; the market panicked as it moved to pricing in four hikes, sending the dollar higher and US indices into correction territory.
Today’s report comes hot on the heels of disappointing wage growth numbers in Friday’s report which has eased fears of a significantly more aggressive Fed. The market is still expected to show sensitivity to the numbers, however we are not expecting a repeat of last month.
Analyst are forecasting a 0.2% increase in inflation month on month, down from 0.5% in January. On an annual basis CPI is forecast to tick higher to 2.2% from 2.1%. Meanwhile core inflation, which strips out more volatile items such as food and fuel is expected to remain constant at 1.8% year on year.
GBP/USD back to $1.38 GBP/USD
consolidated at $1.39 overnight and is seen just slipping lower on the stronger dollar on anticipation of the CPI this morning. A CPI surprise to the downside could see GBP/USD target $1.40, meanwhile a better than forecast reading is likely to give a strong boost to the dollar, pulling GBP/USD back towards $1.38.
Apple acquire Texture
Apple was trading marginally lower in the pre-market this morning, after hitting a fresh all time high in the previous session and despite the announcement that it will buy Texture a digital magazine service.
With the magazine world moving increasingly online, this acquisition of the Netflix of magazines by Apple makes perfect sense. Apple’s desire to continue pushing the boundaries in product innovation and scope continues to capture the markets attention, despite sometimes lackluster iPhone sales.
From time to time, GAIN Capital Limited’s (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.