The stock market rally is continuing but this time with narrow sector breadth as today’s gains are being driven by the Nasdaq. Technology is indeed carrying equities on the back of President Trump bolstering sentiment during an enthusiastic visit to Riyadh in which he explained his intention to grant permission for advanced Nvidia AI semiconductor chips to be shipped to the nation as well as neighboring Abu Dhabi. Meanwhile, investors are also optimistic about the GOP’s taxation package making progress through the House of Representatives, which is helping keep 2 out of 4 of the major benchmarks positive. Market participants are hesitating today, selling shares in every segment minus tech and consumer discretionary, and reducing exposures to Treasuries, the greenback and most commodities ex lumber. Folks are picking up forecast contracts related to tomorrow’s economic data releases, however, which include the PPI, retail sales, unemployment claims and industrial production.
Investors Look to PPI Print
While today’s economic calendar is uneventful, tomorrow will offer clues on the pace of activity, inflation, labor markets, manufacturing, real estate and more. But I think the most awaited reports will be the Producer Price Index (PPI) and retail sales as they’ll inform Wall Street of the trajectory of prices at the wholesale level as well as the state of the consumer. The PPI is especially goods sensitive and could provide critical details regarding the impact of levies on cost pressures in the pipeline. Indeed, it may present a difference of opinion than its more closely watched cousin, the CPI, which is much more geared to services. There’s been conflicting information about the charge trends of physical products and tomorrow’s figures can help reconcile that. Meanwhile, market participants are eager to hear about consumption momentum and are hoping that March’s sharp recovery prior to April 2 tariffs wasn’t all frontloaded demand. Folks want to see expenditure patterns stay firm, indicating that there’s still plenty of gas left in the tank of the expansion.
International Roundup
Wholesale Price Gains Decelerate in Japan
Japan’s Producer Price Index increased 0.2% month over month (m/m) in April, matching the consensus expectation and depicting that wholesale cost pressures eased from the 0.4% gain in the preceding month. Export and import charges in local currency dropped 2.1% and 2.9%, respectively. Among both imports and exports, costs for the agriculture, forestry and fishery products group posted the sharpest jump at 3.4% followed by the 2.9% uptick for electric power, gas and water. The nonferrous metals segment and the iron and steel category had the largest declines with stickers falling 2% and 1.5%. On a year over year (y/y) basis, prices climbed 4%, which also matched the median estimate and marked a deceleration from the 4.3% increase in March.
Australia Wage Increase Surpass Expectations.
Australia’s Wage Price Index climbed 0.9% quarter over quarter during the first three months of this year, exceeding the consensus expectation of 0.8% and accelerating from the 0.7% gain in the preceding reporting period. On a y/y basis, wages were up 3.4% throughout the first quarter. Economists anticipated the rate to remain unchanged from the 3.2% increase in the final quarter of 2024.
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