Key Economic Indicators and Market Moves
Anticipation for CPI Data: The financial world is on high alert as the U.S. prepares to release the latest consumer price index (CPI) figures later today. This data is eagerly awaited amid ongoing speculation about the Federal Reserve’s interest rate plans, especially after a surprisingly robust jobs report last Friday and recent hawkish remarks from Fed officials.
Interest Rate Speculations: Market dynamics have shifted, with Fed funds futures contracts for December now indicating an expectation of approximately 60 basis points in rate cuts for the year, a significant reduction from the 150 basis points anticipated at the beginning of 2024. A strong March CPI could lead markets to adjust expectations, possibly delaying the anticipated rate-cutting cycle start from June to July.
CPI Expectations: Analysts predict a slight uptick in the year-on-year headline CPI, from 3.2% in February to 3.4%. However, there’s an anticipation of a cooling in the monthly price growth and a small decline in the annual core CPI, which excludes volatile food and energy prices.
Fed Minutes Release: Also on the agenda today are the minutes from the last Federal Reserve meeting. This documentation is crucial, as it confirmed the central bank’s projection of 75 basis points of rate cuts this year. Traders will be keen to understand the depth of discussions regarding this outlook.
Wall Street’s Cautious Stance: Ahead of the CPI update, major Wall Street indices have been in a holding pattern, reflecting traders’ hesitancy to make significant moves without clearer signals on the interest rate front.
Earnings Season Kickoff: The focus also shifts to the corporate front, with Delta Air Lines and Taiwan Semiconductor Manufacturing in the spotlight. Delta is expected to report its quarterly earnings, while Taiwan Semiconductor has already made headlines with a sharp increase in March sales, likely driven by the booming demand for artificial intelligence chips.
Fitch’s China Outlook: In international finance news, Fitch Ratings adjusted China’s credit outlook to “Negative” from “Stable,” affirming the A+ rating but citing concerns over public debt and economic growth challenges. This move reflects broader anxieties about China’s economic direction and its shift away from property-reliant growth.
Oil Market Fluctuations: Oil prices saw an uptick amid ongoing uncertainty in the Middle East ceasefire talks, highlighting concerns over supply security from this vital oil-producing region. The situation remains tense, with potential implications for global oil markets, though U.S. crude inventory data suggested a less tight supply than expected.
This week’s financial and economic developments underscore the complex interplay of global politics, market expectations, and economic indicators. As traders and investors navigate these waters, the outcomes of these events will undoubtedly shape market sentiments and strategies in the coming days.
$TSM- Needham analyst Charles Shi raised the firm’s price target on TSMC to $168 from $133 and keeps a Buy rating on the shares. The firm is reducing its FY24 EPS view to $6.20 from $6.41 and warns that the company might be seeing some short-term production delays and wafer losses related to the Taiwan earthquake, which could hurt June-quarter sales, the analyst tells investors in a research note. Needham adds however TSMC should make up most of the lost sales in Q3 and meet its full-year growth targe, also calling the stock “one of the best AI pick-and-shovel stories”.
BofA lowered the firm’s price target on $TSLA- Tesla (TSLA) to $220 from $280 and keeps a Neutral rating on the shares. For the pure EV players like Tesla, Lucid (LCID) and Rivian (RIVN), demand will be the focus in Q1, the analyst tells investors in automotive industry Q1 preview note.
BofA analyst John Murphy lowered the firm’s price target on Lucid Group (LCID) to $3.50 from $4.50 and keeps a Neutral rating on the shares. For the pure EV players like Lucid, Rivian (RIVN) and Tesla (TSLA), demand will be the focus in Q1, the analyst tells investors in the automotive industry Q1 preview note.
$BA-Â Morgan Stanley analyst Kristine Liwag lowered the firm’s price target on Boeing to $180 from $235 and keeps an Equal Weight rating on the shares. After Q1 deliveries from Boeing showed a slower delivery cadence, the firm acknowledges that a slowdown in production may be best for safety, but adds that it sees the slower than expected delivery from production as negative for the stock and free cash flow generation. The firm continue to expect tactical volatility in Boeing’s stock, but also continues to view the risk reward as balanced at current levels.
$BABA-Â Citi analyst Alicia Yap lowered the firm’s price target on Alibaba to $124 from $126 and keeps a Buy rating on the shares ahead of the fiscal Q4 report. The company’s investment focus to drive growth through competitive low-price strategy that attracts consumer demand and purchase frequency might have led to reaccelerated order volume and merchandise volume growth, the analyst tells investors in a research note. However, the firm believes Alibaba’s adjusted EBITA likely will experience further pressure in the near to mid-term given its continued reinvestment in user experience improvement.
$NVDA- Morgan Stanley raised the firm’s price target on Nvidia (NVDA) to $1,000 from $795 and keeps an Overweight rating on the shares. Despite the strong year-to-date appreciation, the firm recommends that investors maintain outsized AI exposure, and the stock is the best way to gain that exposure, the analyst tells investors in a research note. Longer term investments in AI are being fleshed out, the firm adds, noting that hyperscalers are planning data center expansions for the next 3-4 years that would indicate durability, with the biggest headlines being around Microsoft (MSFT) and its $100B “Stargate project”.
$MSFT- Microsoft announced it will invest $2.9B over the next two years to increase its hyperscale cloud computing and AI infrastructure in Japan. It will also expand its digital skilling programs with the goal of providing AI skilling to more than 3M people over the next three years, open its first Microsoft Research Asia lab in Japan, and deepen its cybersecurity collaboration with the Government of Japan. “These investments aim to support Japan’s key pillar to tackle deflation and stimulate the economy by expanding the infrastructure, skilled talent, and security required to accelerate Japan’s digital transformation and adoption of AI,” the company said. “The announcement coincides with Japanese Prime Minister Fumio Kishida’s state visit to the United States, where he was joined by Microsoft Vice Chair and President Brad Smith, and Microsoft Japan President Miki Tsusaka.”
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