FX.co ★ Futures Pointing To Continued Weakness On Wall Street

The primary U.S. indices are pointing towards a lower opening in the market on Wednesday, continuing the downward trend observed in the previous trading session. Fears that the Federal Reserve may postpone lowering interest rates due to more positive economic data might continue to weigh on the markets.

The monthly report from payroll processor ADP reveals an unexpected surge in private sector employment in March, outpacing economist predictions. According to the report, there was an increase of 184,000 private sector jobs in March, following an upward correction to 155,000 in February's report.

Notably, the report highlighted a significant increase in the annual pay growth rate for job-changers, which shot up to 10.0% in March. ADP chief economist Nela Richardson commented on the situation saying, "Even as inflation cools down, our data evidences that compensation in both goods and services is heating up."

Treasury yields have surged post the release of this data. Meanwhile, shares of Intel dropped significantly, pressurizing Wall Street as the company reported a $7-billion operating loss in its semiconductor manufacturing business in 2023, a substantial increase from the previous year's loss.

In spite of this, trading activity might be somewhat restrained as market players eagerly await statements from Federal Reserve Chair Jerome Powell later in the day.

The markets experienced significant losses on Tuesday with major averages finishing in the red. A significant sell-off was observed early in the session followed by continued weakness throughout the trading day. This can be attributed primarily to the uncertainty regarding the outlook for interest rates.

Additionally, robust inflation data from last Friday and the better-than-expected manufacturing statistics released on Monday have made traders question if the Federal Reserve will implement rate cuts in June.

A significant bounce back in factory orders in February was revealed in a report released by the Commerce Department, driving treasury yields to a four-month high.

Noteworthy market movement was seen in networking stocks and housing stocks, both recording a sharp dip. Airline, healthcare, computer hardware, and semiconductor stocks also witnessed a substantial drop. Energy stocks, on the other hand, witnessed a rise due to a significant increase in crude oil prices.

In commodity and currency market trends, crude oil is experiencing a price increase, while the U.S. dollar has risen slightly against the yen.

In Asia, stocks took a tumble on Wednesday as strong U.S. data decreased hopes of a rate cut and rising tensions in the Middle East drove up oil prices, clouding the inflation outlook.Investors are keenly awaiting Federal Reserve Chair, Jerome Powell's upcoming speech for impending clarity on Federal Reserve's economic easing strategy. Today's trading saw gold prices decline following mixed remarks from two Federal Reserve officials, while crude prices registered gains due to concerns over crude and fuel supplies.

The Shanghai Composite Index in China dipped by 0.2% to 3,069.30, despite a recent private survey indicating an expected growth in the country's service sector activity in March. Hong Kong's Hang Seng Index witnessed a 1.2% drop to 16,725.10 as a result of a powerful earthquake in Taiwan that triggered tsunami warnings and caused significant damage to buildings. The repercussions of this earthquake were felt as far away as Japan and the Philippines, but the warnings were subsequently lifted.

Japanese markets also saw a sharp decline over fears of delayed rate cuts due to factors such as inflation and a sturdy U.S. economy. The Nikkei 225 Index fell 1.0% to 39,451.85 while the broader Topix index slid 0.3% down to 2,706.51. Among the most significant losses were Nippon Steel, Advantest, Fast Retailing, and Nintendo, each recording a decline of 2-4%.

Coincidentally, the Japan Meteorological Agency issued a tsunami warning for Japan's southern islands earlier today, but this was later withdrawn. On a brighter note, a survey indicated that Japanese service sector activity grew at its fastest rate in seven months.

Marching in tandem with the trends seen in the Asian markets, Seoul stocks took a downturn, with major losses being recorded in tech, battery, and auto stocks. The Kospi index fell 1.7% to 2,706.97. Australian markets also slipped with the S&P ASX 200 Index dropping 1.3% to 7,782.50 and the All Ordinaries Index sliding 1.4% to end at 8,033.60. New Zealand's S&P NZX-50 Index also declined by 0.5% to sit at 12,040.49.

Moving to Europe, stocks presented a mixed picture after data revealed that Eurozone inflation weakened in March, fueling speculation that the European Central Bank will begin lowering interest rates in June. The FTSE 100 index in the U.K. recorded a 0.3% decrease while French CAC 40 Index and the German DAX Index both showed a marginal gain of 0.2%.

Amid falling shares in companies such as Swiss solar panel manufacturer, Meyer Burger, and reinsurer Swiss Re, British engineering firm Renishaw suffered significant losses after Siemens confirmed it had no plans to make a bid for the company.

Turning to U.S. markets, the March Payroll ADP report indicated stronger than anticipated job growth in the private sector. ADP reported an increase of 184,000 jobs, much higher than the expected figure of 148,000. The primary driver for growth was the leisure and hospitality industry, which added 63,000 jobs during the month. In other news, the Federal Reserve Board Governor Michelle Bowman is set to discuss topics like bank liquidity and Fed's role as the end lender at the Committee on Capital Markets Regulation Roundtable.Federal Reserve Chair Jerome Powell is set to discuss the economic outlook at the Stanford Business, Government, and Society Forum today at 12:10 pm ET.

In addition, Federal Reserve's Vice Chair for Supervision Michael Barr is scheduled to engage in a conversation about the Community Reinvestment Act at the Just Economy Conference 2024 at 1:10 pm ET.

Later, at 4:30 pm ET, Federal Reserve Board Governor Adriana Kugler will delve into "The Outlook of the U.S. Economy and Monetary Policy" in a discussion hosted by Washington University in St. Louis.

Turning to the stock market, shares of egg producer Cal-Maine Foods are showing notable gains in pre-market trading, following the company's fiscal third quarter results, which surpassed both top and bottom-line analyst estimates.

Dave & Buster's, the restaurant, and entertainment chain, is also expected to show early strength. Despite reporting below-expected fiscal fourth quarter earnings, the company has piqued interest by authorizing an additional $100 million share repurchase.

Conversely, shares of chipmaker Wolfspeed could trend downward. This comes after Wells Fargo downgraded its stock rating from Overweight to Equal Weight.