The Stock Markets of Chile and the United States Fall on Economic Reports: Fed Rate Cuts Delayed?

2024-03-14 20:03:00

The stock markets of Chile and the United States fell this Thursdaysince new economic reports from the latter country -unemployment applications y producer prices-raised the expected probability that the Federal Reserve will not kick off the cuts as soon as June, although there is still a 60% chance that it will happen that month.

At the close of Wall Street, the Dow Jones fell 0.35%the S&P 500 0.28% and the Nasdaq 0.3%while Treasury yields jumped by up to 10 basis points (bp)in view of the upward surprise in the Producer Price Indices (PPI) and the downward surprise in requests for unemployment benefits. Yes, retail sales were weaker than expected.

The Chilean S&P IPSA fell 0.47% to 6,460.71 pointscon SQM-B (-3,66%) positioning itself as the paper with the worst daily performance on the Santiago Stock Exchange, and also being the one with the greatest impact within the IPSA. The index of 29 Chilean shares moves away from its all-time high reached on Tuesday.

Dollar falls for third session and closes close to $940 amid renewed rate differential expectations

“In some ways, today has been a microcosm of last month: sticky inflation combined with signs of weakness elsewhere in the economy,” said Chris Larkin, chief trading officer at E*Trade (part of Morgan Stanley). , according to Bloomberg. “The questions now are, Will traders rethink how soon the Fed will cut rates, and will that stop the rally significantly?”he added.

They were the last data points before the Fed meets on March 20 to publish its monetary policy decision. The central bank is expected to begin its easing cycle at the June meeting, something that currency operators swaps discount with a probability of 60%según CME FedWatch Tool. The chances of maintaining the rate rose from 35% to the current 40% following this morning’s figures.

Signs of economic strength also provided additional support to oil prices. Brent rose 1.39% to US$85.2 a barrel – a new high since Novemberfollowing yesterday it was driven by a drop in hydrocarbon inventories and prospects of tight supply of the commodity.

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