Global markets are keenly awaiting the latest U.S. employment report, following weaker-than-expected retail sales figures that have stirred concerns about consumer spending. December’s flat retail data has led to increased speculation about potential Federal Reserve rate cuts, with futures pricing now indicating a nearly 50% chance of a cut as early as April. This contrasts with recent comments from Fed officials who suggested rates would remain steady for the foreseeable future.
The possibility of a more dovish Fed policy has also been influenced by expectations of revisions to previous jobs reports, potentially downgrading job growth figures for the past year. Treasury yields have decreased across the board, and the U.S. dollar weakened, particularly against the Japanese yen, reflecting the changing market sentiment. The S&P 500 ended in negative territory due to retail data concerns, with subdued futures trading observed ahead of the day’s opening bell.
In the technology sector, Taiwan Semiconductor Manufacturing Co. (TSMC), a global chip giant, reported a near 40% year-on-year increase in January revenues, alongside further capital expenditure plans. TSMC manufactures semiconductors and provides design services. ByteDance, the parent company of TikTok, is also reportedly developing a new AI chip with Samsung. However, the market is showing sensitivity to potential disruptions from AI advancements. Altruist, a wealth management startup, launched an AI-driven tax planning tool, causing a decline in the shares of established wealth managers such as Charles Schwab and affecting European financial services stocks.
Economists polled by Reuters suggest that potential Fed Chair nominee Kevin Warsh is more likely to implement looser monetary policy. Today’s key events include the U.S. January employment report, a 10-year note auction, and speeches from Fed officials Michelle Bowman, Jeffrey Schmid, and Beth Hammack. Several major companies, including Cisco Systems, Equinix, Hilton Worldwide, and McDonald’s, are also due to report earnings.