© Reuters
| By Peter Nurse, Investing.com |
The U.S. Consumer Price Index prompted a rethink about the level at which the Fed will halt its interest rate hikes, and Wall Street trading is expected to open lower in response. The retail sales report will be scrutinized, while tech giant Apple will be in focus, after billionaire investor Warren Buffett expanded his stake at the iPhone maker Inflation in the UK surprised downwards, while a surge in US crude inventories hit the oil market.
Here’s what you’ll need to know in the financial markets on Tuesday, February 15.
1. The consumer price index in the US causes a recalculation of the Fed interest rate
Inflation in the US proved to be stickier than expected in January, with headline rising 6.4% so far this year, compared to forecasts of 6.2%.
The report gives the Fed additional impetus to continue raising interest rates in the near term, thus prompting the market to raise its forecast for the level at which the US central bank will end its rate hike streak.
At the beginning of this month, he raised his target rate by a quarter of a percentage point, to a range between 4.75%-4.50%.
New York Fed President John Williams said on Tuesday that the Fed’s short-term interest rate (Fed Fund Rate) for this year of between 5.00% and 5.25% “seems to be a very reasonable view”, but also noted after the release of the price index to the consumer that “our work is not yet finished”, and added that “we will not change our ways until the work is finished”.
Richmond Fed President Thomas Barkin said that “if inflation remains persistently at levels well above our target, we may have to do more,” while Dallas Fed President Lori Logan said that “we must remain prepared to continue raising interest rates for a long period of time.” than we observed before.”
Officials calculated in December that the peak interest rates this year would reach slightly above 5%, but this is a figure that seems to be on the way to a significant increase in March.
2. Buffett takes another bite out of Apple
The Oracle of Omaha has had its say, and it’s good news for tech giant Apple (NASDAQ:
Billionaire Warren Buffett’s investment firm, Berkshire Hathaway (NYSE: ), made changes to its holdings, according to regulatory filings, when it purchased an additional 20.8 million shares of Apple, valued at $3.2 billion, thereby increasing its stake in Apple to 5.8% .
Buffett previously called Apple one of the four “giants” of his concern, and approved the iPhone maker’s share buyback strategy, and is its largest shareholder, apart from index and exchange-traded fund providers.
In contrast, Berkshire Hathaway cut its stake in Taiwanese chip maker TSMC (NYSE: ), just three months after it bought more than $4.1 billion worth of shares in the world’s largest contract chipmaker.
3. The US stock markets are expected to open with lower rates; the retail sales report is expected to be published
US stock markets are expected to open lower later today, as investors digest the slightly larger than expected increase in the consumer price index, ahead of the latest retail sales report, which is a measure of consumer conditions.
As of midday Wednesday, futures were down 85 points, or 0.3%, while futures for the {8839|S&P 500}} and futures were down 0.5%.
The retail sales report for January is scheduled to be published later today, and is expected to indicate an increase of 1.8% compared to December, after falling by 1.1% the previous month.
Quarterly reports are expected to be published by companies such as pharmaceutical giant Biogen (NASDAQ: ), food manufacturer Kraft Heinz (NASDAQ: ), telecommunications company Cisco (NASDAQ: ), and online commerce giant Shopify (NYSE: ).
Shares of the short-term apartment rental company (NASDAQ:
Similarly, shares of the online travel giant ( NASDAQ: ) jumped in early trading after the company posted a strong quarterly performance as travelers looked to spend more on experiences.
4. Inflation in Great Britain eases the pressure on the Bank of England
While US inflation proved stubborn in January, macro data released earlier today showed UK inflation fell more than expected that month, albeit at a higher rate.
It rose 10.1% in January compared to the same period last year, the lowest increase since September, and down from 10.5% the previous month.
The figure is still more than five times higher than the target level of the Bank of England, a fact that raises the possibility that further monetary tightening is still expected.
However, the publication backs up the Bank of England’s comments earlier this month that it saw signs that the surge in the CPI had passed its peak, so the bank may be nearing the end of its rate hike.
5. The price of crude oil falls amid the surge in US oil inventories
The price of crude oil fell on Wednesday, after an industry report indicated a significant jump in US oil inventories, fueling concerns about a drop in demand in the world’s largest oil consumer.
It was reported that US crude oil inventories rose by a massive 10.5 million barrels last week, a much larger amount than expected.
The official report of is expected to be published later on the trading day, and will be reviewed for confirmation.
However, there is little good news from the market today, when it strengthened its global oil demand forecast, against the backdrop of the re-opening of the economy in China, after years of closures due to the Corona epidemic.
“Global oil supply appears to be on track to exceed demand during the first half of 2023, but the balance may soon shift to a deficit as demand recovers and some Russian exports cease,”
said the agency.
As of midday Wednesday, the price retreated 1% to $78.25 a barrel, while the price of crude oil fell 0.8% to $84.88 a barrel.