The hawkish message from Federal Reserve officials continued to dominate the market on Thursday. The major takeaway from policymakers is that more rate increases are imminent and that the rate should stay high for a considerable amount of time. The 2-10 Treasury yield curve has inverted by 85 basis points, the steepest inversion since the early 1980s, creating new concerns about economic woes despite the fact that the statements made here are not new. The Dow Jones Index (US30) and the S&P 500 Index (US500) both experienced declines as the stock market came to an end on Thursday. Yesterday’s loss in the NASDAQ Technology Index (US100) was 1.02%.

Walt Disney announced a restructuring plan that calls for the elimination of 7,000 positions, which may save the company up to $5.5 billion. The fourth-quarter results reported by PayPal Holdings Inc. (PYPL) on Thursday exceeded analysts’ expectations. After the market closed, shares of PayPal Holdings Inc. increased by 7.04%. Analysts were disappointed by the fourth-quarter results that LYFT (LYFT) reported on Thursday. The report caused the company’s stock to drop more than 22%.

Yesterday, most European stock markets were up. The DAX in Germany (DE30) increased by 0.33%, the CAC 40 in France (FR40) increased by 0.96%, the IBEX 35 Index in Spain (ES35) increased by 0.18%, and the FTSE 100 in Britain (UK100) increased by 0.33% on Thursday.

British households will continue to suffer this year, according to the National Institute of Economic and Social Research’s (NIESR) most recent assessment on the economy. NIESR anticipates a 0.3% decline in UK GDP for the fourth quarter. Governor of the Bank of England Andrew Bailey urged employees and businesses to take this year’s anticipated strong decline in inflation into account when negotiating salary agreements. Bailey explained before a parliamentary committee on Thursday that the Monetary Policy Committee’s worry about escalating inflation and the need for greater indications of labor market softening are reflected in the ongoing tightening. The bank anticipates that as wholesale energy costs, import prices, and demand diminish as a result of falling personal income, inflation will start to decline quickly from the middle of 2023 and will be roughly 4% by the end of the year.

According to information released on Wednesday by the US Energy and Information Administration (EIA), weekly crude oil inventory levels are at their highest point since June 2021. A peak in production hasn’t been observed since April 2020. Yesterday, oil prices rose even as stocks increased. The increasing demand from China as a result of Fitch Ratings raising its prediction of China’s economic growth for 2023 from 4.1% to 5% is what is causing the confidence about growth. Fitch attributed the increase to data from the January services PMI index and the fourth quarter of 2022’s real GDP.

Yesterday, Asian stock markets were mainly up. Yesterday, the Nikkei 225 in Japan (JP225) fell by 0.08%, the FTSE China A50 in China (CHA50) gained 1.24%, the Hang Seng in Hong Kong (HK50) rose by 1.60%, the NIFTY 50 in India (IND50) rose by 0.12%, and the S&P/ASX 200 in Australia (AU200) fell by 0.53%.

Next week will likely see the selection of Haruhiko Kuroda’s replacement. There would be opposition within the party, according to a number of Liberal Democratic Party officials, if Yamaguchi, a former deputy governor of the Bank of Japan, were to be chosen as the country’s prime minister. Recent polls of economists who would make good governors of the Bank of Japan placed Yamaguchi’s name in third place. Yamaguchi is seen as a more hardline candidate than the other three contenders. Market investors anticipate that if he is chosen, there will be a considerable increase in market volatility and a signal from the administration that it is dedicated to a clear shift in policy in the direction of normalization.

The Reserve Bank of Australia (RBA) raised its predictions for core inflation and wage growth on Friday and issued a warning about potential future interest rate increases that might increase the likelihood of a recession. The council will keep an eye on labor market statistics since it is crucial to avoid a price-wage spiral. From the prior prediction of 3.9%, annual salary growth is predicted to reach a peak later this year of 4.2% before falling to 3.8% by mid-2025. By mid-2025, the unemployment rate will have steadily increased from its current 3.5% level to 4.4%. The RBA also increased its estimate of GDP growth for this year from 1.4% to 1.6%.

S&P 500 (F) (US500) 4,081.50 −36.36 (−0.88%)

Dow Jones (US30) 33,699.88 −249.13 (−0.73%)

DAX (DE40) 15,523.42 +111.37 (+0.72%)

FTSE 100 (UK100) 7,911.15 +25.98 (+0.33%)

USD Index 103.22 -0.19 (-0.18%)