US Futures Rally after Nvidia Results Beat

United States Stock Market

Stocks futures in the US rallied on Thursday, with contracts on the S&P 500 futures soaring 1.1% to hover at record levels, while the Nasdaq 100 jumped 2.2% and the Dow Jones futures added about 160 points after Nvidia's results topped forecasts. Nvidia shares gained more than 14% in premarket trading as the company reported record revenue and issued upbeat guidance amid robust demand, suggesting the AI-fueled rally will continue. Megacap stocks were also in the green, namely Microsoft (1.8%), Apple (0.7%), Amazon (2%), Meta (2.5%), Alphabet (1.5%) and Tesla (1%). Also, shares of Advanced Micro Devices (5.8%), Intel (3%), Qualcomm (1.9%) and Micron (3%) also gained sharply before the opening bell. Meanwhile, traders appear to shrug off a hawkish Fed after FOMC minutes showed the central bank is in no rush to cut interest rates and needs more confidence the inflation is moving sustainably to 2%. On the data front, initial jobless claims and S&P Global PMIs will be in the spotlight.


Dollar Edges Lower After FOMC Minutes

United States Currency

The dollar index was subdued around 103.7 on Thursday after the latest Federal Reserve policy meeting minutes showed that policymakers were concerned about cutting interest rates too soon, signaling that market expectations for policy easing will not start soon. Traders have mostly given up on bets for any rate reduction in March and May but continue to wager that the first will happen in June, with the odds for a 25 basis point cut standing around 53%. Investors now look ahead to flash PMI reports on Thursday that could provide an update on the US private sector’s performance this month. Last week, both the CPI and the PPI came above forecasts while retail sales and industrial production disappointed. The dollar nursed losses against most major currencies, but continued to strengthen versus the Japanese yen.


Indian Rupee Strengthens to 5-Month Low

India Currency

The Indian rupee appreciated past the 83 per USD mark, its strongest since September 2023, amid a high foreign currency influx and a hawkish RBI. The country’s composite PMI surpassed 60 for a second month in February, backing the 7.3% growth from FY2023, and significantly outperforming other major economies to set a bullish backdrop and promote the inflow of foreign exchange. Foreign investment into India also benefited from investors reallocating funds out of China, driving the Sensex to approach record highs and lowering the yield on the 10-year G-Sec to multi-month lows. In turn, robust economic growth lifted the rupee by adding leeway for the RBI to extend its hawkish guidance. The central bank signaled it will likely maintain interest rates at a restrictive territory and extended its “withdrawal of accommodation” policy despite bets that it would refrain from reducing liquidity, indicating that policymakers continue to see the ample money supply as a threat to inflation.


Sensex Rebounds and Ends in the Green

India Stock Market

The BSE Sensex reverted initial losses to settle higher at 73,158.2 in a volatile session on Thursday, aided by the rebound in IT and auto sector stocks. Shares in ITC were supported by media reports suggesting the company's intention to acquire a 47% stake in Prataap Snacks. The overall market sentiment was uplifted by an optimistic earnings report from the US chipmaker Nvidia and favorable PMI data from the domestic economy. India's business activity experienced a robust expansion in February, marking its fastest pace in seven months, as demand remained strong across both manufacturing and services sectors. Meanwhile, investors awaited the release of the RBI minutes meeting later today for path clues of the central bank's monetary policy outlook. The latest Federal Reserve minutes revealed that policymakers were hesitant about initiating early rate cuts, but this did not alter the expectation of U.S. rate cuts beginning in June.


British Pound Hits 3-Week High on Strong PMI Data

United Kingdom Currency

Sterling consolidated its gains above the $1.265 mark, reaching a new high since February 1st, as investors reevaluated the Bank of England's policy outlook following the release of British PMI data. The survey revealed that the country's private sector activity expanded in February at the fastest pace since last May, and by more than expected, driven by a notable surge in service sector growth. Additionally, mounting inflationary pressures due to robust wage growth among service firms and disruptions to factory supplies resulting from tensions in the Red Sea are likely to keep the Bank of England cautious about reducing borrowing costs.


Canadian Stocks End Lower on Wednesday

Canada Stock Market

The S&P/TSX Composite index ended 0.2% lower at 21,172 on Wednesday, with financial and tech sectors bearing the brunt as investors assessed FOMC minutes. The rate-sensitive tech sector saw a notable average decline of 2.4% amid the Fed's cautious stance on rapid rate cuts due to persistent inflation. Meanwhile, insureriA Financial Group plummeted 8.9% after reporting Q4 profits below estimates, dragging down heavyweight financials by 0.7%. In corporate news, First Quantum Minerals reported a net loss in Q4 due to the closure of its Cobre Panama mine, impacting production. Despite the challenging results, the copper miner managed to secure gains of 2.6%. Concurrently, Gildan Activewear revealed Q4 results that exceeded analysts' expectations, leading to a 3.5% boost in their shares.


Gold Climbs as Dollar Weakens


Gold rose toward $2,030 an ounce on Thursday, extending gains for the sixth straight session as the dollar weakened on growing uncertainties about the US interest rate outlook. The latest Federal Reserve policy meeting minutes showed that officials expressed caution about cutting interest rates too quickly, possibly delaying the start of the easing cycle. Traders have mostly given up on bets for any Fed rate reduction in March and May but continue to wager that the first will happen in June, with the odds for a 25 basis point cut standing around 53%. Investors now look ahead to flash PMI reports on Thursday that could provide an update on the US private sector’s performance this month. Gold also benefited from increased safe-haven demand amid rising geopolitical tensions in the Middle East.


Oil Holds Gains on Bullish Fundamentals


Brent crude futures held around $83 per barrel on Thursday after gaining nearly 1% in the previous session, as market pricing indicated a strong demand outlook in the near term. Analysts also pointed to a series of outages in US refineries that hindered supply, with BP’s 435,000 barrels-per-day refinery in India expected to return to full production in March, while TotalEnergies’ 238,000 bpd refinery in Texas still operating partially. Investors now look forward to weekly data from the US EIA for further insights on the market. Elsewhere, pessimism regarding the timing of an eventual ceasefire between Israel and Hamas and ongoing Houthi attacks on Red Sea shipping continued to put a risk premium on oil prices. Meanwhile, recent data showed that Iraq, OPEC’s second-largest producer, failed to comply with its output cut in January.


US Natgas Prices Rally on Production Cutbacks


US natural gas futures jumped above $1.7/MMBtu, after Chesapeake Energy slashed its 2024 gas production projections by about 20% by scaling back capital expenses, reducing rig counts, and delaying well completions. This move is expected to lower gas output to around 2.7 billion cubic feet per day. Other major gas producers like Antero Resources, Comstock Resources, and EQT have also revealed plans to curtail drilling activities this year. US natural gas prices hit their lowest since June 2020 at $1.522/MMBtu, driven by near-record production, abundant fuel storage, and above-average temperatures. Additionally, technical issues at Freeport LNG's export facility have limited gas flow to LNG export terminals, and record levels are not expected until the plant returns to full power.


Copper Jumps to 3-Week High


Copper futures rose to above $3.85 per pound in February, the highest in three weeks, benefitting from a softer US dollar and hopes that economic support in China will spur industrial activity and demand for input materials. Beijing extended a series of economic support measures to spur economic activity and counter the contractionary manufacturing momentum, per the latest official PMI, and mounting concerns of accelerating deflation. Most recently, this includes a record-setting 25bps cut in the PBoC’s five-year loan prime rate, while state-owned lenders announced that over CNY 60 billion were set aside for infrastructure and property projects, including the China Construction Bank and the Industrial and Commercial Bank of China. The poor industrial demand in the country was consistent with a decline in the Yangshan copper premium as factories refrained from purchasing the metal, while inventories in major Chinese warehouses soared by over 180% year-to-date to 86,000 tonnes.

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