Caution is expected as concerns rise over the economic outlook

The Dow and the S&P 500 snapped a four-day winning streak and closed almost 0.6% lower each on Tuesday, while Nasdaq lost 0.5%.  Market sentiment was dented by renewed recession fears after the release of a new batch of economic data.  US job openings, fell below 10 million for the first time since 2021 in February, while factory orders declined further, suggesting that the economy could be cooling amid higher interest rates.  In Europe, the Euro Stoxx 50 Index closed marginally higher as oil and gas shares fell after the previous day’s rally while the financial services sector rose. 

Summary as at 05.04.2023 

• Asian equity markets mostly fell on Wednesday, taking cues from a negative lead on Wall Street as risk sentiment was hurt by signs the US economy was cooling.  Markets were jolted after the Reserve Bank of New Zealand raised interest rates by 50 basis points to 5.25%, defying expectations for a more moderate quarter-point rate hike.  Shares in New Zealand, Australia and Japan declined, while South Korean equities advanced.  Meanwhile, markets in Hong Kong and mainland China were closed for the Qingming Festival. 
• European shares may struggle for traction at the open while US equity futures rose slightly early morning as concerns over US banks linger. 
• Oil prices kept to a small range this morning as markets digested a slew of weak US economic indicators, while signs of shrinking inventories and a recent OPEC production cut pointed to tighter supply.   Data from the American Petroleum Insitute suggested that US crude inventories shrank by 4.3 million barrels last week, far more than expectations for a draw of 1.8 million barrels. 

• US job openings in February dropped to the lowest level in nearly two years, suggesting that the labour market was cooling.  The demand for jobs decreased from 632,000 to 9.9 million on the last day of February, the lowest level since May 2021, the Labour Department said in its monthly JOLTS report on Tuesday.  Data for January was revised lower to show 10.6 million job openings instead of the previously reported 10.8 million.  Consensus had forecast 10.4 million job openings. 
• New orders for US manufactured goods fell by 0.7% from a month earlier in February, following a revised 2.1% drop in January and compared with market expectations of a 0.5% contraction.  This was the second consecutive month of decline in factory orders. 
• The producer price inflation in the Euro Area eased further to 13.2% year-on-year in February, down from a revised 15.1% advance in the previous month and slightly below market expectations of 13.3%.  Without energy, producer price inflation slowed to 10.2% year-on-year in February from 11.1% in January.  On a monthly basis, producer prices declined by 0.5%, more than forecasts of a 0.3% decrease. 
• Federal Reserve Bank of Cleveland President Loretta Mester said policymakers should move their benchmark rate above 5% this year and hold it at restrictive levels for some time to quell inflation, with the exact level depending on how quickly price pressures ease.