- US futures wavered early Thursday after the Dow and the S&P reached new all-time highs on Wednesday.
- Investors are awaiting producer price index data, which could provide further clarity on US inflation and so the path for the Fed.
- Asian equities fell as investor concerns about Chinese regulatory crackdowns resurfaced.
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US stock futures were muted Thursday after markets closed out the regular session at new all-time highs, as investors waited for fresh economic data to shed light on the Federal Reserve’s policy path.
Both the Dow Jones and S&P 500 closed at record highs on Wednesday after the release of US inflation data that came in generally as analysts expected. July’s consumer price index rose 0.5%, at a slower pace compared with June, which calmed investor concerns.
Some investors have worried that with inflation at multiyear highs, the Fed may be prompted to start winding down its bond buying sooner rather than later. But the Fed has insisted it views higher inflation rates as transitory.
San Francisco Fed President Mary Daly said in an interview published Thursday that the central bank could start tapering its stimulus this year, as she expects the US economy to continue its robust post-pandemic recovery in coming months.
“The Federal Reserve could start dialling back its ultra-accommodative monetary stimulus by the end of the year, given the strength of the economic rebound,” she told the Financial Times.
A US report on weekly initial jobless claims is expected later Thursday, likely to be watched for signs of recovery in the labor market that could influence the Fed’s thinking.
An update on the producer price index is due later Thursday, which will give a reading of US inflation from a production standpoint.
“If today’s US PPI numbers for July follow a similar pattern to yesterday’s CPI, then that could reinforce further the transitory narrative that the US Federal Reserve has been pushing on for several months now,” Michael Hewson, chief market analyst at CMC markets commented.
In Asia, the surge in Delta coronavirus variant cases and associated lockdown restrictions continued to weigh on markets, as did signs of continuing regulatory pressure from China.
“Although regulatory threats have had a modest impact today, the lesson seems to be that gains in China stock will be limited for some time because of them. I doubt the cheapness of price to governmental risks ratio for China equities has finished its repricing exercise lower yet,” Jeffrey Halley, senior market analyst at Oanda, said in a note.
Oil prices dipped on Thursday ahead of OPEC’s monthly oil market report release, after rising the previous day when the U.S. Energy Information Administration reported that crude inventories had fallen. Brent crude was last down 0.11%, trading at $71.36 per barrel, while WTI crude fell 0.16%, to $69.14 per barrel.