TL/DR –
Wall Street was slightly down early Friday but held onto gains from earlier in the week as markets awaited key US economic data. Upcoming reports on inflation and gross domestic product could influence the Federal Reserve’s next interest rate move, with a higher measure of inflation potentially dissuading officials from a rate cut. Elsewhere, European shares were higher at midday Friday, but Asian markets had a mixed day, with Tokyo’s Nikkei 225 falling 1.1% due to concerns about investments in artificial intelligence and a possible US-Iran conflict.
US Stocks Decline Slightly as Economy Data Awaited; AI Risks Impact Asian Markets
US stocks recorded marginal decreases early Friday, with Wall Street barely holding on to gains from earlier in the week. Investors are closely watching the upcoming data on inflation and GDP, which will greatly influence Federal Reserve’s interest rate decisions.
Prior to the opening bell, futures for the S&P 500, Dow Jones Industrial Average, and Nasdaq were all 0.2% lower. Investors and Fed officials are particularly interested in the consumer spending report due later today, as it includes the Fed’s preferred inflation measure.
If inflation is higher than expected, it could prompt Fed officials to maintain interest rates as they are out of fear that a cut could trigger price hikes. Recent job reports, especially the January jobs report, which surpassed expectations, could support this decision.
An upcoming report on the nation’s Q4 GDP is also awaited, with analysts predicting economic growth in the range of 1.9% to 3.5%. Strong figures could further strengthen the case for holding interest rates steady. The Fed has previously stated that more significant inflation decreases would be necessary before considering further rate cuts this year.
Meanwhile, European shares made slight gains at midday Friday despite a mixed day of trading in Asia. Concerns over AI investments and a potential US-Iran conflict are influencing global markets. Germany’s DAX, Paris’s CAC 40 and Britain’s FTSE 100 all saw increases.
Asian markets were negatively impacted by concerns over AI affecting financial institutions. Tokyo’s Nikkei 225 fell by 1.1% as major banks and financial institutions like Mitsubishi UFJ Financial Group saw stock declines. Meanwhile, Hong Kong’s Hang Seng lost 1.1% upon reopening after Lunar New Year holidays.
South Korea’s Kospi, however, surged to a new record, rising by 2.3% largely due to increased defence spending. On the other hand, Australia’s S&P/ASX 200 edged 0.1% lower in the same region.
In the energy markets, oil prices eased following a significant hike due to rising US-Iran conflict fears. US benchmark crude and Brent, the international standard, both recorded price drops. Gold and silver prices, however, saw increases.
Finally, the price of Bitcoin experienced minor fluctuations, registering a marginal increase to $67,513.
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