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The Dow Jones Index (US30) was down 0.17% at the close of the stock market yesterday. The S&P 500 Index (US500) lost 0.60%. The Nasdaq Technology Index (US100) closed negative 0.92%. The broad market was under pressure yesterday as weakness in chip maker stocks led to a decrease in the technology sector. Shares of Nvidia (NVDA) fell more than 5%, leading to a decline in technology sector stocks ahead of Wednesday's fourth-quarter earnings results.

Tesla (TSLA) shares fell more than 3% after Phillip Securities downgraded the stock to "neutral." Airbnb (ABNB) is down more than 3% after Phillip Securities downgraded the stock to "neutral" from "buy". Caterpillar (CAT) is down 1% after Evercore ISI downgraded the stock to "neutral" from "buy". Walmart (WMT) is up over 4%, leading the Dow Jones Industrials, after the company reported Q4 comparable sales rose by 3.9%, which was stronger than the consensus forecast of 3.2%.

Today, in the US, the minutes from the January FOMC meeting will be released. Investors will be looking for clues on the timing of the first-rate cut. Traders and investors have heard several Fed officials speak since the January meeting, and most preached patience with rates, warning against a premature cut, citing the strength of the US economy. If the minutes strike the same tone, given that the market is still pricing four rate cuts this year while the Fed has signaled only three, the dollar could get a boost. This would hurt stock indices and precious metals.

Canada's annual inflation rate for January 2024 fell to 2.9%, the lowest since June, from 3.4% the previous month and well below market expectations of 3.3%. The result marked a sharp reversal from the significant reading in December, renewing hopes for disinflation in the Canadian economy and strengthening the case for more easing measures from the Bank of Canada (BoC) on rising growth concerns.

Equity markets in Europe traded yesterday without a single dynamic. Germany's DAX (DE40) was down 0.14%, France's CAC 40 (FR40) was up 0.34%, Spain's IBEX 35 (ES35) jumped 0.94% on Tuesday, and the UK's FTSE 100 (UK100) closed negative 0.12%.

The latest ECB report showed that Eurozone wage growth slowed to 4.5% in the final quarter of last year from a record 4.7% in the previous period. This confirmed market expectations that while wage growth has peaked, it is still well above the level consistent with 2% inflation. ECB President Christine Lagarde recently said she prefers to wait for the outcome of the first quarter wage agreement before considering a rate cut. Other policymakers have supported the cautious sentiment for monetary easing, suggesting that rate cuts are possible this year but refraining from giving a specific timeline for such moves.

The Swiss National Bank (SNB) may start cutting its benchmark discount rate in the year's first half, including possibly a March cut. The SNB also increased its foreign exchange reserves for the second consecutive month in January, indicating a recovery from a prolonged decline over the past two years that has seen reserve levels hit seven-year lows.

Asian markets traded flat yesterday. Japan's Nikkei 225 (JP225) was down 0.28% for the day, China's FTSE China A50 (CHA50) added 0.03%, Hong Kong's Hang Seng (HK50) increased by 0.57% on Tuesday, and Australia's ASX 200 (AU200) was negative 0.08% on the day. Hong Kong stocks (HK50) soared to a seven-week high of 16,615 in Wednesday morning trading, rising for a second straight session, amid rising bets that China's central bank may go for more policy easing this year after a record cut in the main 5-year lending rate on Tuesday, as policymakers seek to support economic growth. Economists say China's increased stimulus could boost its growth and positively impact the global economy.

Japan's trade deficit narrowed sharply to JPY1,758.311 billion in January 2024 from JPY3,506.43 billion in the same period of the previous year. Exports rose by 11.9% Y/Y to JPY7,332.65 bln, the highest in 14 months, helped by strong demand from the US and China. Meanwhile, imports fell 9.6% YoY to JPY9,090.97 bln, marking the tenth consecutive month of decline driven by lower energy prices. The Tankan sentiment index for manufacturers in Japan fell sharply to negative 1 in February 2024 from plus 6 in January, adding to fears of a further economic slowdown.

Australian wages rose by 4.2% year-on-year in the fourth quarter, beating forecasts for a 4.2% increase and the highest since the first quarter of 2009. Wage growth tends to be accompanied by rising inflation figures. This could eventually lead to the Reserve Bank of Australia (RBA) holding rates for longer than forecast.

• S&P 500 (US500) 4,975.51 −30.06 (−0.60%)
• Dow Jones (US30) 38,563.80 −64.19 (−0.17%)
• DAX (DE40)  17,068.43 −23.83 (−0.14%)
• FTSE 100 (UK100) 7,719.21 −9.29 (−0.12%)
• USD Index  104.00 −0.08 (−0.07%)

Important events today:

• Japan Trade Balance (m/m) at 01:50 (GMT+2);
• Australia Wage Price Index (m/m) at 02:30 (GMT+2);
• US FOMC Member Bostic Speaks at 15:00 (GMT+2);
• US FOMC Member Bowman Speaks at 20:00 (GMT+2);
• US FOMC Meeting Minutes at 21:00 (GMT+2).

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