Market snapshot: unspectacular moves as rate debate continues

Global markets were mixed, with some investors in the US taking profits following the previous day’s solid gains.

In the absence of any specific economic or corporate data, the technology-led S&P500 and Nasdaq indices posted marginal losses, with the Semiconductor index taking a pause for breath, as did the current market leader NVIDIA Corp (NASDAQ:NVDA), which slipped by just over 1%.

Similarly sized markdowns for the likes of Apple Inc (NASDAQ:AAPL) and Meta Platforms Inc Class A (NASDAQ:META) also weighed and, while there is presently no sign that the appetite for AI stocks is waning, there is some emerging evidence that the more recent market rally could be broadening out to other sectors which have been left behind in the rush for technology stocks.

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Further clues on inflation will come later in the day with the release of the producer price index, a measure of wholesale inflation which is expected to have risen by 0.3% in February at the headline level and by 0.2% excluding the more volatile energy and food prices.

The data could muddy the water if the reading comes in hotter than expected, given that the recent CPI print showed some signs of inflation remaining sticky in the final push towards the Federal Reserve’s target of 2%.

In addition, readings on retail sales and the labour market will provide additional clues ahead of the Fed meeting next week, with no change to the interest rate expected, with the consensus currently anticipating the first cut in June.

In the meantime, the main indices remain comfortably ahead so far this year despite a relatively tepid day of trading, with the S&P500 posting gains of 8.3%, the Nasdaq 7.8% and the Dow Jones 3.6%.

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Asian markets were similarly mixed, with another reminder of geopolitical tension between the US and China weighing on sentiment. Quite apart from its own domestic economic challenges, China is also dealing with some tech broadsides from the US, the latest of which was a bill passed which could effectively see TikTok banned in America, while there were also reports that a global association of biotech companies based in Washington was also looking to separate from its Chinese member Wuxi AppTec.

Meanwhile, the Nikkei index came under some further pressure as investors mulled the increasing likelihood that the Bank of Japan will shortly exit its negative interest rate policy, driven in part by news of some significant pay rises among its larger companies. The speculation sent bond yields higher, while the more recent strength of the yen could also have some detrimental impact on the country’s exporting success over recent months.

Given the mixed global lead, UK markets opened in unspectacular fashion, with investors searching for catalysts. One of the current themes for debate is the gulf between the US and the UK, not only in terms of market performance, but also the expected difference in timings to the first interest rate cut. Despite much weaker growth than the US, the UK seems likely to keep rates in a holding pattern until August, in an attempt finally to put the inflation genie back in the bottle.

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Also weighing on the premier index was the usual raft of companies going ex-dividend on a Thursday, with the likes of Anglo American (LSE:AAL), Entain (LSE:ENT), NatWest Group (LSE:NWG) and Haleon (LSE:HLN) among the shares being marked down at the open.

The more domestically focused FTSE250 continued to edge higher although unable to reverse the weakness from earlier in the year and still down on balance by 0.6% in the year to date. The FTSE100, meanwhile, is clinging on to gains achieved over recent days, with the index now ahead by just 0.5% so far this year.