A man buys fruit at a grocery store in New York City on February 1, 2023.
Leonardo Muñoz | Corbis News | Getty Images
This report is from today's international market newsletter CNBC Daily Open. The CNBC Daily Open provides investors with everything they need to know, no matter where they are. Like what you see?You can subscribe here.
Hang Seng leads Asia losses
Hong Kong's Hang Seng Index led the decline in Asian markets, dragged down by consumer cyclicals and tech stocks. Mainland China's 300 CSI species also fell. In Japan, the Nikkei Stock Average fell while the TOPIX rose as investors awaited updates on spring wage negotiations. Overnight, Wall Street ended lower after a key U.S. inflation measure beat expectations and U.S. Treasury yields rose. The Dow Jones Industrial Average fell more than 100 points (0.35%), ending its winning streak after three days. The S&P 500 and Nasdaq each fell about 0.3%.
Why are wage negotiations important in Japan?
Japan's “spring labor” wage negotiations reached a climax this week with several major companies revealing pay hikes. The outcome of these widely anticipated discussions is crucial and could influence the Bank of Japan's decision on when to end its negative interest rate policy.
Wealth tax attracting attention
Does a wealth tax actually work? The issue is back in the spotlight after US President Joe Biden said he would impose a new “billionaire tax” on the country's ultra-wealthy if he wins in November. These proposals, outlined in the 2024 Budget, have reignited the debate over a wealth tax on the world's wealthy.
HSBC is bullish on China
HSBC's chief financial officer told CNBC that despite the current challenges, the bank is “very positive” about the medium- to long-term outlook for China's economy. Growth has slowed as China continues to struggle with a real estate crisis and exports remain weak.
[PRO] Looking beyond Nvidia
Investment firm Fidelity International said investors should look beyond high-performance companies like Nvidia to ride the AI ​​wave. There are other indirect competitors, including semiconductor foundries, packaging technology companies and memory companies, which could be potential winners, the company said.
Yet another inflation gauge got hot.
Wholesale prices rose faster than expected in February and were well above consensus.
“Very, very poor wholesale inflation report. Obviously food and energy prices are going up… which means the Fed won't cut interest rates until after June because they don't have the economic tea leaves they need.” “It means not to do it,” said founder Louis Navellier. As Navellier & Associates explains:
Wall Street fell on the news, putting pressure on U.S. Treasury yields.
The PPI data came on the heels of February's consumer price data, which showed inflation was higher than expected for the second month in a row.
This highlights the tough balancing act the Fed faces in containing price pressures across the economy. Investors are also increasingly worried that the central bank believes inflation is not cool enough to start cutting interest rates.
Mohamed El-Erian, Chief Economic Advisor of Allianz, said: said in X“There is a growing recognition of how relatively sticky inflation is making the last mile to the Fed's 2% inflation target difficult.''
Some economists even argue that the latest economic data is likely to boost price expectations for personal consumption spending in February, the Fed's preferred inflation measure.
“Combining CPI and PPI data, we would report a 0.4% rise in the core PCE deflator in February,” Pantheon Macroeconomics said. “Our detailed forecast is 0.37%, slightly lower than January's 0.41%. “Good, but still too fast.” .
“Again, this is probably unsustainable, but the Fed is being very cautious and the latest data will definitely make it easier for hawks to argue for a delay,” he added. “We have therefore changed our initial call for a rate cut and now expect it to occur in June rather than May.”
But investors will have to wait until the end of this month for PCE data to get a more accurate picture of the Fed's calculations.