This report is from today’s TNC’s Daily Open, our international markets update. TNC Daily Open keeps investors informed on everything they need to know, no matter where they are.
What To Note Today
Core CPI Is Lower Than Expected
The U.S. Bureau of Labour Statistics said Wednesday that the 12-month inflation rate was 2.9% after the U.S. consumer price index rose a seasonally adjusted 0.4% in December. Core inflation, which does not include the cost of food and energy, increased by 3.2% annually and 0.2% monthly. Compared to November, the yearly reading decreased by 0.1 percentage points. Additionally, both core readings fell 0.1 percentage points short of forecasts.
Israel And Hamas Reach A Ceasefire Agreement
The 15-month conflict in the Gaza Strip came to an end on Wednesday when Israel and Hamas agreed to a truce and the release of hostages. The Israeli security cabinet must still approve the deal before implementation. According to U.S. President Joe Biden, if the agreement is ratified, the first phase will involve a complete ceasefire and the evacuation of Israeli forces from the populous sections of the Gaza territory.
Markets Have Their Greatest Day Of The Month
On the strength of the lower-than-expected inflation reading and the reduction of Treasury yields, U.S. stocks surged on Wednesday for their highest day since November. On Thursday, Asia-Pacific markets followed Wall Street’s upward trajectory. The Bank of Korea unexpectedly maintained its benchmark rate at 3%, which caused South Korea’s Kospi index to rise by more than 1%. Additionally, the BOK cautioned that it is “very likely” that the nation’s GDP will fall short of projections for 2024 and 2025.
Sales At TSMC Are At An All-Time High
After Taiwan Semiconductor Manufacturing Company reported fourth-quarter earnings and revenue that exceeded LSEG consensus estimates, the company’s shares, which are listed in Taiwan, saw a 3.8% increase. Last Monday, the company announced its December revenue, which reached 2.9 trillion New Taiwan dollars ($88 billion), the biggest yearly sales since it went public in 1994.
Large Banks Exceeded Earnings Projections
Goldman Sachs and JPMorgan Chase easily outperformed Wall Street forecasts for fourth-quarter sales and earnings. Even though CEO Jamie Dimon referred to the stock as pricey in May, JPMorgan executives stated the firm will increase share buybacks. At a separate event following the bank’s earnings call, Goldman CEO David Solomon stated that IPO activity will “ pick up” due to “an improved business environment.”
Bottom Line
After a poor start to the year in which markets reported weekly losses due to persistent inflation concerns, bulls have finally had a run of positive news.
The page’s top: U.S. inflation was less than anticipated in December. Indeed, headline inflation for the month exceeded the Dow Jones consensus estimate by 0.1 percentage points.
However, because core inflation eliminates the erratic fluctuations in food and energy costs, it provides a more realistic picture of price changes in the economy, which is why the U.S. Federal Reserve gives it greater consideration.Â
As Jeff Cox of CNBC pointed out, “A large portion of the increase in the CPI was due to a 2.6% increase in energy prices for the month, which were driven higher by a 4.4% increase in petrol prices.” According to the BLS, that accounted for almost 40% of the index’s rise.
According to John Kerschner, head of U.S. securitized products and portfolio manager at Janus Henderson Investors, “today’s CPI number takes additional rate hikes off the table, which some market participants were beginning to prematurely price in.”
The U.S. 10-year Treasury yield dropped precipitously, from its close of 4.774% last Friday to its current 4.655%, as traders lowered their expectations for interest rates.Â
Stocks have breathing room as a result. The Dow Jones Industrial Average increased 1.65%, the S&P 500 up 1.83%, and the Nasdaq Composite increased 2.45%. All three major averages had their finest day since November 6.
Banks’ positive profit reports also contributed to the optimism. Banks’ toplines grow when businesses and consumers engage in greater financial activity, contributing to economic growth. Their financial results are frequently used as a predictor of the economy’s overall direction.
On Wednesday, the stars aligned for investors. However, volatility persists in the shape of a new U.S. administration and policies, much like the skies are always changing.
