Tech Stocks Fall Ahead of Fed – Nasdaq Down 1.5%
Tech stocks took a hit in trading yesterday, led by mega-cap Nvidia, as investors looked ahead to key Fed risk events later in the week. The Dow held up well, closing up 0.02% at 44,922, while the tech-heavy S&P and Nasdaq indexes both fell, dropping 0.59% to 6,411 and 1.46% to 21,314, respectively. The dollar pushed higher against the majors, with the DXY up 0.11% to 98.15, while Treasury yields pulled back ahead of tonight’s Fed meeting minutes—the 2-year down 1.5 basis points to 3.748% and the 10-year down 2.7 basis points to 4.306%. Oil prices fell hard as traders priced in an end to sanctions on Russia, with Brent down 0.93% to $65.94 and WTI down 1.43% to $62.51. Gold also dropped on the stronger dollar and a step up in market sentiment, down 0.51% to $3,315.78 an ounce.
UK Inflation Numbers in Focus for Sterling Traders
UK inflation figures are due early in the European trading session, and traders are expecting plenty of volatility in the pound around the event. Inflation has remained relatively high in the UK, giving the Bank of England a headache as it also battles a weakening job market, and the MPC will be hoping for a lower print. Expectations are for the headline year-on-year CPI number to show a 0.1% increase to 3.7%, and anything higher will put pressure on the bank to halt cuts and should see the pound rise. A lower print will help ease concerns on inflation and should trigger a sell-off in sterling. Cable is currently in the middle of recent ranges, and a significant deviation either way in the CPI could see a run to either side of the range.
Huge Calendar Day Ahead for Traders
It is a big calendar day ahead for traders, with key central bank updates due out alongside important data across all three trading sessions. The initial focus in Asian markets will be on China, with the PBOC’s latest Loan Prime Rate updates due early in the session, where both are expected to stay at current rates (1-year 3.00% and 5-year 3.50%), before attention shifts further south to the Reserve Bank of New Zealand’s latest rate call and updates, where the bank is expected to cut rates by a further 25 basis points. UK markets will be in focus early in the European day with key CPI numbers due. The headline year-on-year number is expected to show a still-sticky 3.7% increase, and traders are expecting moves in the pound around the event. There is little in the way of data due out in the New York session, with just the usual weekly US Crude Oil Inventory numbers expected (exp. -0.8mio barrels). However, there is a big Fed focus, with FOMC members Waller and Bostic both scheduled to speak around the key FOMC meeting minutes release.
