Contracts for the S&P 500 and Nasdaq 100 declined by around 0.4%. In Europe, the Stoxx 600 index fell as investors reviewed the most recent earnings. Reckitt Benckiser Plc plunged 12%, the biggest since 2008, after the consumer products giant reported lower revenues. ASM International NV fell amid the semiconductor manufacturer’s dismal sales estimate.
Aside from profits, emphasis is focused on US GDP and inflation figures, as well as a strong lineup of central bank speakers. Investors are dealing with a decline in expectations for how much the Federal Reserve and the European Central Bank would decrease interest rates.
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“In December, markets priced significant rate cuts for 2024, but what has happened is that we have had slightly problematic inflation prints in most parts of the world,” said Guy Miller, chief market strategist at Zurich Insurance Co. “The US economy has done better than what many people expected, the labour market remains tight and wage gains have been higher than what central bankers are comfortable with.”
Traders have shifted to price only 75 basis points of US easing by year-end, which is consistent with what Fed policymakers predicted in December as the most likely conclusion. Treasury rates fell Wednesday, as the dollar index rose to its highest since February 20.
Cryptocurrency-linked stocks rose as Bitcoin surged for the sixth day, putting it on course for its greatest monthly gain since October 2021. The debut of spot Bitcoin exchange-traded funds in the United States in early January triggered a rush in purchasing, overriding fears about slower Fed rate reduction. Bitcoin surpassed $59,000 on Wednesday, up over 40% this month.
Equity benchmarks in Hong Kong fell by more than 1% after the city’s budget announcement failed to please investors. Chinese equities slumped following a recent rise that brought gauges near resistance levels, with traders expecting for impetus from this week’s manufacturing data and a critical political summit in Beijing next week.
Oil slumped following a two-day rally, as signals of increasing US stocks clashed with anticipation that OPEC+ will continue production curbs. Iron ore prices maintained their decline as investors remained uncertain about the robustness of China’s steel demand ahead of the country’s normal peak building season.
The New Zealand currency fell more than 1% as the Reserve Bank of New Zealand issued less hawkish views on inflation, highlighting the fact that most indicators of price expectations had declined.
Meanwhile, Nigeria’s naira fell to a new low after the central bank’s larger-than-expected 400 basis point interest rate hike on Tuesday failed to strengthen the currency. The naira has been weakened by a local currency scarcity and a backlog of demand for the greenback.