Global Economy

CNBC Daily Open: Key inflation data looms with rate cuts in focus

People shop in the produce section of a grocery store on September 12, 2023 in Los Angeles, California.

Mario Tama | Getty Images

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today 

Nikkei rallies
Japan’s Nikke
i briefly crossed the 38,000 level for the first time since 1990 on Tuesday, while the rest of the region also mostly advanced. The Nikkei 225 rallied about 3%, while the Topix also gained. Overnight in the U.S. the blue-chip Dow closed at a fresh record. But the S&P 500 closed down after the broad-market index just closed above 5,000 for the first time on Friday. The tech-heavy Nasdaq Composite inched lower. 

China’s confidence problem
China’s biggest problem is a “lack of confidence,” Standard Chartered CEO Bill Winters told CNBC. China’s stock market and deflation issues, coupled with its property troubles are posing a challenge for its growth prospects. “External investors lack confidence in China and domestic savers lack confidence,” Winters noted.

China, Russia threat
A new study showed China and Russia are seen as less of a threat to Western populations now than a year ago. This is mainly because public concern has shifted to non-traditional risks such as mass migration due to war or climate change and radical Islam.

Bitcoin surges
Bitcoin extended its gains, breaking through the $50,000 level on Monday. This is a major milestone since the “launch of spot ETFs last month not only failed to elicit a move above this key psychological level but led to a selloff and some deep soul searching about these new bitcoin products,” said Antoni Trenchev, co-founder of crypto services firm Nexo.

[PRO] China’s still in play
Despite the problems plaguing China’s economy, there are several sectors and stocks that offer good investment opportunities said Redmond Wong, market strategist at investment firm Saxo. “I’m still positive and optimistic on China right now,” he noted.

The bottom line

Wall Street gets its first look at U.S. inflation on Tuesday when the consumer-price index for January is published.

This is a much-anticipated report that once again draws attention to what the Fed might do on interest rates.

A lower-than-expected CPI reading will boost investor hopes that rate cuts may happen sooner rather than later.

Still, recent commentary from Fed officials reinforced the central bank’s cautionary tone and that it needs greater confidence in inflation data to begin the rate cutting cycle. 

Federal Reserve Governor Adriana Kugler last week highlighted that there are signs that inflation is easy, but said she wants to see more evidence of it.   

“I am pleased by the progress on inflation, and optimistic it will continue, but I will be watching the economic data closely to verify the continuation of this progress,” Kugler said.

Minneapolis Fed President Neel Kashkari also expressed caution on cutting rates too quickly and said he only expects two or three reductions this year.

More key economic data is also expected this week, including January’s reading on retail sales, production and the producer price index. These should give investors fresh hints on the Fed’s path for rate cuts amid the uncertainty.  

— CNBC’s Jeff Cox contributed to this report


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