Alibaba

Alibaba shares saw a minor rise of 0.3% in the last session. The Williams indicator is giving a positive signal, going against our overall technical analysis.
Alibaba shares saw a minor rise of 0.3% in the last session.
The Williams indicator is giving a positive signal.

Resistance 72.395 Support 70.885

U.S. Inflation Comes In As Expected

U.S. equity and bond markets were closed on Friday in observance of Good Friday, but that didn’t stop the U.S. government from releasing its latest Personal Consumption Expenditures Index (PCE). Considering that this is the Federal Reserve’s favorite measure of inflation that will leave markets catching up on Monday.

Fortunately the report shouldn’t cause much disruption in markets as it came in right as expected, showing annual PCE inflation of 2.8%. That leaves expectations for Fed rate cuts unchanged, with a 70% chance of a cut at the June meeting, and then two more cuts by the end of 2024. Of course that could change, given that inflation is not yet at the 2% target mandated by the Fed.

On a monthly basis the PCE showed a 0.3% increase, and when stripping out volatile food and energy prices, called the core PCE, the rise was a more modest 2.5% on an annual basis. The Fed does consider the core PCE as a more important measure, but takes both values into account. Core PCE hasn’t dropped to the 2% level or below in three years, though it has been trending lower.

Analysts believe markets will move quickly past these expected PCE readings and focus immediately on the upcoming non-farm labor numbers due out at the end of next week. If those come in as weaker than expected it could well offset a bit of stickiness in the inflation data.

Rising energy costs, which were up by 2.3% contributed to the headline PCE reading. Goods inflation, which came in at 0.5% was also a contributing factor, though service inflation dropped to 0.3% versus the 3.8% level seen at the same time last year.

Asian Daily Market Review

Asian markets ended Thursday mixed as investors digested the possibility of delays to interest rate cuts in the U.S. after a Fed official floated the idea on Wednesday. Japan’s Nikkei was the biggest loser in the region, with the Yen remaining near a 34-year low amid speculation that the Bank of Japan is preparing for stimulus to prop up the languishing currency. Meanwhile Australia’s major index hit a record high, helped by gains from the mining sector.

Japan’s Nikkei ended the session 1.5% lower, underperforming the entire Asian region. Shares of Softbank Group fell by 0.7%, while Sony shares finished 1.8% lower. Among the major exporters Toyota lost 1.2%, Panasonic shares slipped 0.5% lower, and Canon edged lower by 0.2%.

In Australia the S&P/ASX 200 rallied to a new record high, adding 1% for the day. The gains for the broader market came despite a mixed performance for the big four banks, where ANZ gained 0.5%, Commonwealth Bank advanced by 0.3%, Westpac tacked on 0.4%, but NAB slipped slightly lower by 0.1%. The major miners had a good day, supporting the broader market with a 1.4% gain from BHP and a 0.7% move higher in Rio Tinto.

Mainland Chinese markets recovered from their losses of the prior session, with the benchmark Shanghai Composite rising by 0.6% and the smaller cap Shenzhen Composite adding 1.3%. Over in Hong Kong the Hang Seng followed the mainland higher, gaining 0.9% on the day.

In South Korea the Kospi slipped 0.3% lower, and in Taiwan the Taiex did the same, ending the day with a 0.3% loss.

Southeast Asian markets were also weaker on the day, with Singapore’s Straits Times Index declining by 0.9% while the KLCI in Malaysia fell by 0.5%.