U.S. stock index futures are little changed in pre-market trading on Wednesday after a strong recovery in stocks on Tuesday. The indices surpassed the levels seen on August 2, prior to the global sell-off on August 5. The rapid recovery has prompted caution among analysts, and today’s CPI report could influence the market, while concerns about weakening labor markets persist.
As of 05:17 AM ET, Dow Jones futures (DOWI:DJI) rose 46 points or 0.12%. S&P 500 futures are nearly flat, and Nasdaq-100 futures declined 0.12%. The 10-year Treasury yield stood at 3.85%.
In the commodities market, oil prices edged higher due to a drop in U.S. crude and gasoline inventories and tension in the Middle East. The escalating conflict between Israel and Gaza and a potential response from Iran to the assassination of a Hamas official are generating uncertainty about global oil supply.
West Texas Intermediate crude for September rose 0.65% to $78.87 per barrel, while Brent for October climbed 0.64% to $81.21 per barrel.
The U.S. economic calendar for Wednesday includes the release of the July Consumer Price Index (CPI), expected to rise 0.2%, in contrast to the 0.1% decline in the previous period. The annual CPI is expected to remain stable at 3.0%. The July Core CPI is also expected to rise by 0.2%, slightly above the previous 0.1%, while the annual Core CPI is expected to decrease from 3.3% to 3.2%.
Asia-Pacific markets closed mixed on Wednesday. The Reserve Bank of New Zealand cut its interest rate for the first time since March 2020, lowering it to 5.25%, surprising the market and weakening the New Zealand dollar. The decision, motivated by inflation nearing its target, signals possible further cuts.
Japan’s Nikkei 225 rose 0.58%, ending at 36,442.43, and the Topix advanced 1.11% to 2,581.9, both posting gains for the third consecutive day.
In August, Japanese manufacturers were less confident, with the sentiment index dropping to +10, impacted by weak demand from China and the recent interest rate hike by the Bank of Japan. On the other hand, the service sector saw a slight improvement in sentiment, reaching +24.
Japanese Prime Minister Fumio Kishida will not seek a second term, allowing for a new contest for the leadership of the Liberal Democratic Party. With the LDP dominating parliament, the new leader will likely become the next prime minister. Kishida cited frustrations with scandals and economic management as reasons for his decision.
In South Korea, the Kospi rose 0.88% to 2,644.5, and the Kosdaq gained 1.56%, closing at 776.83, with the country’s July unemployment rate falling to 2.5%, the lowest level since October 2023.
Australia saw a modest 0.31% increase in the S&P/ASX 200, which ended at 7,850.7, while ASX faces legal action for misleading statements about its CHESS clearing system.
In contrast, Hong Kong’s Hang Seng fell 0.55% near the close.
Mainland China’s CSI 300 dropped 0.75%, hitting a nearly seven-month low of 3,309.24. In July, weak economic indicators in China lowered expectations for 2024 growth, signaling the need for more stimulus. New bank loans fell, exports slowed, and factory activity declined. The post-pandemic recovery has not materialized as expected, and growth may fall short of the 5% target.
European markets are up, driven by cautiously optimistic sentiment following recent inflation prints from the U.S. and the UK. In the UK, inflation rose 2.2% in July, below expectations, and services inflation fell to its lowest level in two years. This relief could lead the Bank of England to consider a rate cut in November, though inflation remains a concern.
Additionally, investors are evaluating earnings from major companies as well as inflation data from France. AstraZeneca (LSE:AZN) surpassed £200 billion in market value for the first time, driven by advances in cancer medications, highlighting it as the most valuable listed company in the UK.
On Tuesday, U.S. stocks closed higher, driven by expectations that the Federal Reserve might lower interest rates at its next meeting after the release of lower-than-expected producer price data. The Dow Jones rose 1.04%, the S&P 500 advanced 1.68%, and the Nasdaq gained 2.43%, ending the day near session highs.
The U.S. Department of Labor report showed that the Producer Price Index (PPI) rose 0.1% in July, in line with economists’ expectations, after a 0.2% increase in June. The annual growth rate slowed to 2.2%.
On the earnings front, UBS Group (NYSE:UBS), (BOV:UBSG34), Brinker International (NYSE:EAT), Cardinal Health (NYSE:CAH), (BOV:C1AH34), CAE Inc. (NYSE:CAE), Dole Food Company (NYSE:DOLE), PFGC (Performance Food Group Company) (NYSE:PFGC), Arcos Dorados (NYSE:ARCO), Public Square (NYSE:PSQH), MediWound (NASDAQ:MDWD), uCloudlink (NASDAQ:UCL), and others will report before the market opens.
After the close, numbers are expected from Cisco Systems (NASDAQ:CSCO), (BOV:CSCO34), AST SpaceMobile (NASDAQ:ASTS), dLocal (NASDAQ:DLO), Arcutis Biotherapeutics (NASDAQ:ARQT), StoneCo (NASDAQ:STNE), (BOV:STOC31), Canoo Inc (NASDAQ:GOEV), Geopark (NYSE:GPRK), (BOV:GPRK34), Dragonfly Energy (NASDAQ:DFLI), Longeveron (NASDAQ:LGVN), Lulus (NASDAQ:LVLU), and more.