U.S. equities finished lower on Friday ahead of this week's Federal Reserve meeting with U.S. consumer sentiment falling in March to the lowest levels since 2011.
The University of Michigan consumer sentiment survey for March declined more than forecast to 59.7 from 62.8 previously, missing estimates of 61.4. The sentiment was weighed with higher inflation expectations, rising to a four-decade high in the aftermath of Russia’s invasion of Ukraine. The report showed the highest-ever share of Americans expect their finances to worsen this year, highlighting the impact of inflation on incomes. This is likely to be partially offset by continued strength in the labour market with plenty of jobs available with the Federal Reserve widely expected to raise interest rates by 25 basis points at the conclusion of a two-day meeting early Thursday morning AEDT. The meeting also coincides with the updated publication of economic projections known as “dot plots” which economists expect to show somewhat lower growth, higher inflation and lower unemployment. In other economic data this week, U.S. producer prices for February due on Tuesday will give further insight into the outlook for inflation, followed by retail sales for February on Wednesday and the conference board leading index on Friday.
The S&P500 declined -1.30% on Friday, taking a weekly decline to -2.88% with all sectors lower on Friday paced by communications -1.88%, technology -1.80% and consumer discretionary -1.79% with 81% of stocks lower. The Dow Jones also declined -0.69%, as did the Nasdaq Composite -2.18% and Russell 2000 -1.59% with the VIX rising +1.72% to 30.75.
European equities rebounded following recent selling that may have pushed prices too low too quickly offsetting concerns around the Ukraine conflict. The Euro Stoxx 600 gained +0.95%, as did the DAX +1.38%, CAC +0.85% and FTSE100 +0.80% with major benchmarks higher across the region posting the first weekly gain since the outbreak of the conflict. The sentiment was also boosted with Russian President Putin suggesting there has been positive progress on talks, which has been rebuffed by Ukraine as well as a lack of details over any progress. The Euro weakened -0.67% to 1.0912 as did the Pound -0.37% to 1.3037. In economic data ahead for the week, investors will focus on the ZEW economic sentiment survey for March on Tuesday, followed by the final reading of inflation data for February on Thursday as well as a speech by ECB President Christine Lagarde.
*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.
Despite the negative lead from Wall Street ASX200 futures are pointing to a positive open this morning finishing 20 points or +0.28% higher at 7,071 on Saturday morning. The index declined -0.94% on Friday pushing the index -0.66% lower for the week. Ahead for the week investors will focus on the Westpac leading index for February on Wednesday, followed by unemployment data on Thursday expected to show a modest decline in the unemployment rate to 4.1% from 4.2% previously, with +40k jobs added over the month.
Oil prices finished higher on Friday with both WTI and Brent crude +3.12% and +3.02% higher at US$109.33 and US$112.67 a barrel although fell by -5.49% and -4.61% respectively on a weekly basis. Base metals weakened over the week following signs that Ukraine was open to concessions to Russia in order to secure a peace deal. Aluminium declined -9.51% for the week, as did copper -4.60%, lead -5.43%, tin -7.24% and zinc -5.83% while nickel was +66% higher after trading was suspended earlier in the week. Iron ore futures were -3.06% lower on Friday and are little changed at US$157.50 this morning. Gold weakened -0.43% on Friday to US$1,988 as did silver -0.16% to US$25.87 and Bitcoin -1.19% which is little changed over the weekend at US$38,738.
This article was written by James Woods, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3632.
