Equity markets experienced a downturn on Wednesday following the release of the latest Consumer Price Index (CPI) figures, which indicated a higher-than-expected level of inflation. Energy and real estate shares were particularly affected, while smaller and mid-sized companies underperformed due to their sensitivity to rising bond yields. The prospect of delayed interest rate cuts by the Federal Reserve, prompted by the persistent inflation data, further dampened investor sentiment. Despite this, comments from House Speaker Mike Johnson regarding tariff exemptions provided some support. Meanwhile, European indices mostly edged higher, as investors considered the potential implications of increased U.S. tariffs. The dollar remained relatively stable, while West Texas Intermediate crude oil prices declined following a reported rise in U.S. crude inventories.
Key Economic Indicators to Watch
Looking ahead, market participants are keenly awaiting the release of the Producer Price Index and jobless claims data, which will provide further insight into the state of the economy and inform expectations for future monetary policy. While the Fed appears poised to maintain its current course, average hourly earnings outpacing inflation could support consumer spending.
Corporate News and Market Movers
CVS Health shares surged on strong earnings, contrasting with declines for Biogen, which lowered its earnings guidance. After-hours trading saw contrasting movements, with Reddit experiencing a decline, while Cisco soared on raised annual forecasts. These company-specific events, coupled with macroeconomic indicators, continue to shape the overall market landscape.
Latest Market and Economic Update – Asia and Europe
Asian equities rose on Thursday, driven by a rally in Chinese technology shares fueled by AI optimism and strong dealmaking activity in Japan’s tech sector, despite concerns over U.S. inflation data. Markets across the region showed resilience, with Japan’s Nikkei 225 and Hong Kong’s Hang Seng hitting new highs, although sentiment remained cautious due to rising trade tensions and expectations of higher U.S. interest rates.
U.S. equity futures rose overnight as investors anticipated further earnings reports and the latest producer inflation data. Despite mixed performances in after-hours trading, with Reddit falling sharply and Applovin, Cisco, Dutch Bros, and Robinhood all soaring, market sentiment was supported by positive comments on tariff exemptions, though traders remained cautious ahead of key economic data.
European equities saw modest gains on Wednesday, with Germany’s DAX rising 0.5% and France’s CAC 40 gaining 0.2%. Key movers included Heineken, whose shares soared 14% following strong profit growth, while Randstad’s equities dropped 6% due to weak performance, and Ahold Delhaize saw a 5% decline amid concerns over market volatility.
US Dollar and Oil Prices
The dollar index continued its recent decline this morning, staying below 108 despite a hotter-than-expected U.S. CPI report, which showed inflation surpassing forecasts. Against the euro, the dollar remained under pressure, with the EUR/USD trading at 1.0434, as markets adjusted their expectations for only a single rate cut by the Federal Reserve this year.
Oil prices dropped in Asian trade on Thursday, pressured by the possibility of a peace treaty between Russia and Ukraine, which could lead to the lifting of U.S. sanctions on Russian oil. Brent crude futures fell 0.9% to $74.51 a barrel, with additional downward pressure from weaker U.S. inventory data and ongoing concerns over higher U.S. interest rates.
Geopolitical Tensions and Economic Data
China has proposed hosting a summit between Russian President Putin and U.S. President Trump to help facilitate peace talks and end the Ukraine war, according to reports. The proposal follows Trump’s recent discussions with both Putin and Ukraine’s Zelenskiy, with Trump ordering U.S. officials to begin talks on resolving the conflict, while Beijing continues to advocate for peace efforts on its own terms.
U.S. consumer prices rose by 3.0% in January, slightly above expectations, signaling persistent inflationary pressures that could impact the Federal Reserve’s approach to interest rate cuts. The core inflation measure, excluding food and fuel, also edged up to 3.3%, suggesting inflation remains above the Fed’s 2% target, potentially delaying rate reductions further.
Equities on the Move – Company Updates
The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:
- Cisco Systems raised its annual revenue forecast, citing increased demand for its cloud networking products driven by the AI boom. Shares rose 6.6% in after-hours trading. The company also announced a $15 billion increase in its share buyback program and expects fiscal 2025 revenue to reach between $56 billion and $56.5 billion, supported by strong demand from corporate customers upgrading their networks for AI initiatives.
- Robinhood exceeded fourth-quarter profit expectations, driven by a 236% increase in transaction-based revenue, particularly a 700% surge in crypto trading amid optimism over Donald Trump’s return to the White House. The company posted an adjusted profit of $1.01 per share and reported a record-breaking $1 billion in revenue for the quarter, capping a strong year with over $3 billion in total revenue.
- Reddit Inc reported better-than-expected fourth-quarter earnings, with a 39% year-on-year increase in daily active users and revenue rising to $427.7 million, surpassing analysts’ expectations. However, despite strong results, Reddit’s shares fell 13.2% in after-hours trading, and the company projected first-quarter 2025 revenue between $360 million and $370 million, slightly above consensus estimates.
- Applovin Corp shares surged by 29% after reporting fourth-quarter earnings of $1.73 per share, exceeding analysts’ expectations of $1.25, with revenue reaching $1.37 billion. The company also forecasted first-quarter 2025 revenue between $1.355 billion and $1.385 billion, above the consensus estimate of $1.321 billion.
- CVS Health surpassed Wall Street’s fourth-quarter profit expectations, with shares rising more than 15% after the company issued a forecast in line with analysts’ estimates, signaling progress under new CEO David Joyner. Despite challenges in its healthcare benefits unit, the company saw a 7.5% revenue increase in its pharmacy and wellness segment, and provided an annual profit outlook of $5.75 to $6.00 per share.
- Lyft Inc. shares dropped nearly 10% after the company reported Q4 earnings that missed expectations and issued a lower-than-expected Q1 bookings forecast, with revenue slightly surpassing estimates. Analysts from RBC Capital Markets and BMO Capital Markets downgraded their price targets, citing aggressive pricing from rival Uber and a weaker outlook, although they noted positive signs in rides growth and the impact of autonomous vehicles.
- Kraft Heinz forecasted lower-than-expected annual profit and missed quarterly sales estimates, with sluggish demand for products like Lunchables and packaged meat following price hikes, causing its shares to drop 5%. The company is facing challenges from reduced spending by middle-to-lower-income groups, higher input costs, and lower volumes, while it continues to invest in marketing and technology to compete with cheaper private-label alternatives.
- Heineken‘s shares surged 14% after the Dutch brewer reported better-than-expected profits for 2024, with an 8% increase in revenues driven by increased demand for its products in Asia and Africa. The company also raised its full-year forecast and announced plans to expand into new markets in South America.
- Biogen‘s stock dropped 9% after the company revised its earnings forecast downward due to slower-than-expected sales of its Alzheimer’s drug. Although the drug has shown promise in early trials, the company faces competition from other treatments and increasing concerns over the future of its key drug pipeline.
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