US stocks were mostly higher and shrugged off firmer-than-expected US CPI data - Newsquawk Asia-Pac Market Open

• US stocks finished mostly in the green and ultimately shrugged off the firmer-than-expected US CPI data with early weakness in stocks swiftly pared and with the major indices led by the Nasdaq as tech and semiconductor shares soared, while the S&P 500 posted a record close and the Russell 2000 was the outlier which closed flat. Furthermore, the dollar and bonds also saw two-way price action to the inflation prints although finished the session with a more traditional response to the hawkish data.
• USD was ultimately firmer on the day after hotter-than-expected CPI although initially saw two-way price action following the release as the report likely does little to alter the Fed's near-term narrative given there is three months' worth of CPI, NFP and PCE data all still due before the June meeting.
• Looking ahead, highlights include New Zealand Food Prices & South Korean Unemployment Rate.

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LOOKING AHEAD

• Highlights include New Zealand Food Prices & South Korean Unemployment Rate.
• Click here for the Newsquawk Week Ahead.

US TRADE

• US stocks finished mostly in the green and ultimately shrugged off the firmer-than-expected US CPI data with early weakness in stocks swiftly pared and with the major indices led by the Nasdaq as tech and semiconductor shares soared, while the S&P 500 posted a record close and the Russell 2000 was the outlier which closed flat. Furthermore, the dollar and bonds also saw two-way price action to the inflation prints although finished the session with a more traditional response to the hawkish data.
• SPX +1.12% at 5,175, NDX +1.49% at 18,219, DJIA +0.61% at 39,005, RUT -0.02% at 2,065.
• Click here for a detailed summary.

NOTABLE HEADLINES

• WSJ's Timiraos said February CPI isn't doing much to change expectations around a June cut because there is still a lot of time between now and June, while he added that the bigger question is whether it will change officials' core PCE projection for 2024 next week as the rate outlook flows from there.

DATA RECAP

• US CPI MM (Feb) 0.4% vs. Exp. 0.4% (Prev. 0.3%)
• US CPI YY NSA (Feb) 3.2% vs. Exp. 3.1% (Prev. 3.1%)
• US Core CPI MM (Feb) 0.4% vs. Exp. 0.3% (Prev. 0.4%)
• US Core CPI YY NSA (Feb) 3.8% vs. Exp. 3.7% (Prev. 3.9%)
• US Cleveland Fed CPI (Feb) 0.4% (Prev. 0.5%)

FX

• USD was ultimately firmer on the day after hotter-than-expected CPI although initially saw two-way price action following the release as the report likely does little to alter the Fed's near-term narrative given there is three months' worth of CPI, NFP and PCE data all still due before the June meeting.
• EUR initially weakened amid the dollar strength but with EUR/USD cushioned by support near 1.0900.
• GBP was pressured following after data showed higher UK unemployment and softer wage growth.
• JPY underperformed and USD/JPY briefly climbed above 148.00 as US yields rose post-CPI data.

FIXED INCOME

• Treasuries ultimately dipped after the hotter-than-expected US CPI data and a poor 10yr auction.

COMMODITIES

• Oil prices were choppy and eventually settled lower with headwinds in the US afternoon following firmer-than-expected US CPI data and mild dollar strength.
• OPEC MOMR (Feb) kept demand forecasts unchanged from the prior month with the 2024 world oil demand forecast remaining at 2.2mln BPD, while it was stated that OPEC oil supply cuts stall as Iraq keeps pumping above quota, according to Bloomberg.
• EIA STEO stated that US crude oil production is expected to rise by 260k BPD to 13.19mln BPD in 2024 (vs. previously forecasted rise of 170k) and is expected to rise by 460k BPD to 13.65mln in 2025 (prev. forecast of a rise of 390k BPD).
• Russian President Putin said he supports restrictions on oil production with OPEC+, but there is an alternative position and risks of losing global market share, according to Interfax.

GEOPOLITICAL

MIDDLE EAST

• Israeli army launched air strikes on Hezbollah compounds deep in Lebanon, while reports also noted an Israeli raid on the vicinity of the town of Sareen in eastern Lebanon, according to Sky News Arabia.
• Qatar Foreign Ministry spokesperson said Gaza ceasefire talks continue in Doha and Cairo, while the spokesperson said the sides are not near any ceasefire deal but Qatar remains hopeful.
• CIA Director Burns said "still a possibility" of a Gaza ceasefire deal but added that many complicated issues are still to be worked through.

OTHER

• Poland’s PM Tusk said he will tell US President Biden that NATO capabilities on the eastern flank will need to be increased in the future. In relevant news, Poland's President Duda said in a meeting with US President Biden that NATO allies should increase their defence spending to 3% of GDP, while it was also reported that the US State Department approved a potential sale of Sidewinder missiles and advanced medium-range Air-to-Air missiles to Poland for an estimated cost of USD 219mln and USD 1.69bln, respectively.
• Russia's Deputy Foreign Minister said Russia is studying China's proposal on an agreement regarding nuclear weapons, according to Interfax.

ASIA-PAC

NOTABLE HEADLINES

• Chinese Premier Li is to reportedly skip the meeting with global CEOs at the upcoming Chinese development forum, according to Reuters sources.
• TikTok owner ByteDance boosts China ties and invests in a state-backed chip firm, according to The Information. It was separately reported, that TikTok US executives recently told headquarters that a ban wasn't an imminent risk, according to WSJ citing sources.
• BoJ will likely offer numerical guidance on how much government bonds it will buy upon ending NIRP and YCC to avoid causing market disruptions and is likely to roughly maintain the current pace of bond buying after ditching YCC and forgo sharp cuts in the amount for the time being, according to Reuters sources. Furthermore, the BoJ is likely to forgo offering explicit guidance on how soon it will hike rates again amid uncertainties in the economic outlook and any guidance on the future policy path is likely to be in line with Ueda comments on maintaining accommodative monetary conditions even after ending negative interest rates.

DATA RECAP

• Indian CPI Inflation YY (Feb) 5.09% vs. Exp. 5.02% (Prev. 5.10%)
• Indian Industrial Output YY (Jan) 3.8% vs. Exp. 4.1% (Prev. 3.8%)
• Indian Manufacturing Output (Jan) 3.2% (Prev. 3.9%)

EU/UK

NOTABLE HEADLINES

• BoE Governor Bailey said the question of policy restrictiveness is now key and the question now is how long the BoE needs to be restrictive, while he added that the world remains a more uncertain place than they have been used to.
• UK PM Sunak "briefly" met one-on-one with 1922 Committee Head Brady before the executive meeting, according to Sky's Coates.
• Citi/YouGov Poll (Feb) showed UK 1yr ahead inflation expectations fell to 3.6% (prev. 3.9% M/M) and 5-10yr expectations fell to 3.5% (prev. 3.6%).
• ECB's Buch said underlying vulnerabilities may not have been exposed and there are early signs of a deterioration in loan portfolios including in loans to smaller firms and firms in sectors such as construction and real estate.

DATA RECAP

• UK Employment Change (Jan) -21k (Prev. 72k)
• UK ILO Unemployment Rate (Jan) 3.9% vs. Exp. 3.8% (Prev. 3.8%)
• UK Claimant Count Unemployment Change (Feb) 16.8k (Prev. 14.1k, Rev. 3.1k)
• UK Average Earnings (Ex-Bonus)(Jan) 6.1% vs. Exp. 6.2% (Prev. 6.2%)
• UK Average Week Earnings 3M YY (Jan) 5.6% vs. Exp. 5.7% (Prev. 5.8%)
• German HICP Final MM (Feb) 0.6% vs. Exp. 0.6% (Prev. 0.6%)
• German HICP Final YY (Feb) 2.7% vs. Exp. 2.7% (Prev. 2.7%)
• German CPI Final MM (Feb) 0.4% vs. Exp. 0.4% (Prev. 0.4%)
• German CPI Final YY (Feb) 2.5% vs. Exp. 2.5% (Prev. 2.5%)