©Reuters
By Peter Nurse
Investing.com — President Biden intends to name a new Fed vice chairman, with a number of policymakers set to speak on Thursday. Corporate earnings continue to pour in while there is also a slew of economic data releases to study including the weekly jobless claims. Chinese growth gives crude oil markets confidence as ECB chief Christine Lagarde cements another rate hike. Here’s what you need to know about the financial markets on Thursday, February 16th.
1. Biden wants to replace Brainard on the Fed board
President Joe Biden’s decision to appoint the vice chairman as his chief economic adviser has resulted in a vacancy in the role of vice chairman of the Fed, with The Wall Street Journal suggesting that Chicago Fed President Austin Goolsbee will remain in the frame is.
Goolsbee began his role in Chicago just last month and was previously an economic adviser to President Barack Obama and a professor of economics at the University of Chicago Booth School of Business.
Speakers on Thursday include , , and , and their comments will be carefully scrutinized following this week’s inflation release.
January came in stronger than expected earlier this week, forcing market participants to reconsider the Federal Reserve’s stance. They now expect to continue raising rates through June and no longer see a rate cut this year as a safe bet.
2. US stocks open marginally lower; Result in focus
US stock markets are expected to open marginally lower as investors digest more corporate earnings ahead of a slew of major economic data releases [see below].
By 06:25 ET (11:25 GMT) they were down 32 points or 0.1%, down 0.1% and down 0.1%.
Earnings reports from major retailers for the holiday quarter are expected to arrive next week, and that could give investors pause for thought when it comes to the health of American consumers.
Before that, earnings from companies like Applied Materials (NASDAQ:), Hasbro (NASDAQ:), and Paramount Global (NASDAQ:) are due before the bell, while DoorDash (NYSE:) and DraftKings (NASDAQ:) are scheduled after the close.
Year (NASDAQ:) will also be in the spotlight after shares of the streaming device maker boosted premarket and quarterly expectations, while Shopify (NYSE:) tumbled after the e-commerce company’s guidance for the current quarter had disappointed.
3. US data deluge
The US rose its fastest in nearly two years in January, according to data released on Wednesday, giving investors more confidence in the economic outlook even as aggressive monetary tightening continues.
This has led investors to believe that the resilience of the US economy could still result in a soft landing where stable and low coexists with slowing inflation and higher interest rates.
That theory will be put to the test on Thursday as a spate of economic data releases are slated for release.
Weekly will provide a gauge of labor market health; could provide a clue to underlying inflationary pressures; will be a key metric for real estate investors; while which is likely to provide a measure of business sentiment.
4. Lagarde signals a 50 basis point hike in March
It is expected to raise interest rates by another half a point next month.
ECB President Christine Lagarde made this clear in a speech to EU lawmakers in Strasbourg on Wednesday, when she indicated that price pressures remained strong and underlying inflation remained elevated.
However, what happens next remains unclear.
There are a number of dovish ECB officials who have said the March rate hike is unlikely to be the last in what is already the most aggressive monetary tightening cycle in the institution’s history.
But Lagarde said that after next month’s hike, policymakers will “assess the way forward for our monetary policy,” with any future decision likely to be data dependent.
could fall faster than previously thought, ECB policymaker Pablo Hernández de Cos said on Wednesday, while Fabio Panetta, Italy’s appointee to the ECB’s executive board, called for caution early on Thursday, speaking of a series of rate hikes that will see the central bank lower interest rates by 300 basis points since July has not yet been fully felt by the economy.
5. Higher crude oil edges versus China require confidence
Crude oil prices edged up Thursday, spurred by fresh evidence of a recovery in energy demand in China, the world’s largest crude oil importer, as the country responds to the lifting of its tough COVID-19 restrictions.
China’s passenger traffic in January rose 34.8% year on year, the aviation authority said at a news conference on Thursday.
This increased confidence comes on the heels of the International Energy Agency raising its forecast for oil demand this year by 100,000 barrels a day from last month’s forecast and expecting China to account for nearly half of the additional 2 million barrels a day.
This overshadowed the news that US crude inventories rose 16.3 million barrels to 471.4 million barrels last week, the highest since June 2021.
As of 06:25 ET, futures were up 0.2% to $78.75 a barrel, while they were up 0.1% to $85.49 a barrel.
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