Proactive Investors - 8.12am: Fed chair Powell delivers hawkish speech
Another factor could weigh on stocks on top of a slightly hot inflation print today.
Overnight, US Federal Reserve chair Jerome Powell cautioned against getting your hopes up for a near-term interest rate cut.
“Recent data have clearly not given us greater confidence,” said Powell. Instead, they “indicate that it’s likely to take longer than expected to achieve that confidence”.
He stated that the Fed is willing to maintain the current level of interest rates “for as long as needed” if inflation does persist in the world’s largest economy.
"More recent data shows solid growth and continued strength in the labour market, but also a lack of further progress so far this year on returning to our 2% inflation goal," Powell said.
Despite his hawkish comments, the S&P 500 and Nasdaq 100 closed in the green.
In London, the FTSE 100 opened effectively flat at 7,820.
7.59am: ASOS’s revenues for 18% in first half
ASOS (LON:ASOS) PLC (LSE:ASC) saw group sales fall 18% year on year in the 26 weeks to 3 March, with top-line revenues coming in slightly above £1.5 billion.
Adjusted losses before tax (LBT) increased from £87.4 million in the first half of 2023 to £120 million, though on a statutory basis, LBT improved from £290.0 million to £270 million.
ASOS cited progress under its ‘Back to Fashion strategy’, focusing on improving speed, agility, and profitability, as a highlight in the period.
However, ASOS’s £4.6 million of adjusted earnings (EBITDA) in the first half of 2023 flipped to adjusted losses to the tune of £16.3 million this year.
ASOS reiterated its full-year guidance of a sales decline between 5% to 15%, and a positive adjusted EBITDA.
ASOS also announced the appointment of Dave Murray as chief financial officer and executive director, replacing interim CFO Sean Glithero.
7.25am: Mixed news on the inflation front
The March inflation print came in hotter than expected at 3.2% against market forecasts of 3.1%, though this still makes for the lowest year-on-year rate since August 2021.
Annual core inflation (which is a better indicator of consumer income pressures) slowed to 4.2% in March, the lowest since December 2021 and down from 4.5% in February.
Retail prices, which also came out this morning, decreased to 4.3% year on year in March from 4.5% in February, marking the lowest rate of retail price inflation since July 2021.
It paints a picture of dogged determination for the economy to cool, though at a slightly slower rate than policymakers might hope.
Office of National Statistics chief economist Grant Fitzner noted that “food prices were the main reason for the fall, with prices rising by less than we saw a year ago”.
“Similarly to last month, we saw a partial offset from rising fuel prices,” he added.
7.10am: Stocks face tough macro conditions
The FTSE 100 could fall even further when markets open today after taking a major battering on Tuesday.
Blue chips plummeted 145 points to finish the day 1.8% lower at 7,820. It was one of the sharpest falls in a year.
As well as concerns about the Middle East, investors are also becoming more worried about the rising Treasury yields, as the odds of a US summer rate cut diminish.
There was mixed news on the macroeconomic calendar this morning, with the March inflation print coming in hotter than expected. Though at 3.2% year on year, it was still the lowest level since August 2021.
A swathe of producer and retail prices will soon be announced.
On the company news front, large-cap betting firm Entain will soon have a trading update out, while ASOS PLC (LSE:ASC) will provide an interim earnings report.
Futures contracts have the FTSE 100 index opening eight points lower at 7,807.