U.S. Federal Reserve Board Chairman Jerome Powell speaks during a news conference following a meeting of the Federal Open Market Committee (FOMC) at the headquarters of the Federal Reserve on June 14, 2023 in Washington, DC.
Drew Angerer | Getty Images News | 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
Dow rallies
U.S. stocks ended higher Tuesday as investors awaited the latest Federal Reserve’s interest rate decision. The 30-stock Dow closed more than 300 points higher at 0.8%, notching its best day since Feb. 22. The S&P 500 added 0.56%, closing at a fresh record, while the tech-heavy Nasdaq Composite gained about 0.4%.
BOJ pivot implications
Japan’s central bank has finally abandoned its negative rates regime — the last in the world. The Bank of Japan on Tuesday hiked interest rates for the first time in 17 years. How it will impact global markets remains to be seen. Bank of America — among those who predicted the BOJ move — only expects a “limited” immediate impact globally since the rate decision was already well priced.
Nvidia shares rise
Shares of Nvidia closed up 1% after CEO Jensen Huang said the U.S. chip giant aims to grow its share of $250 billion data center market. “What makes us unique is that we’re the only chip company I believe that will create its own market,” he said at an analyst meeting. His comments come a day after the company unveiled its next generation of AI chips.
Kuwait oil CEO on energy demand
The CEO of Kuwait Petroleum Corporation said global energy demand will outstrip the rate of population growth through 2050. “That means that we’re going to require more energy intensity for the population in the world,” Shaikh Nawaf al-Sabah said at an energy conference, contradicting forecasts that demand will peak by 2030.
[PRO] UBS global stock picks
UBS revealed its high conviction global stock picks across Europe and Asia, giving one a 90% upside. It selected 32 buy recommendations “poised to captivate and elevate” investors’ portfolios for Europe. For Southeast Asia, the bank picked stocks such as petroleum producer PTTEP and conglomerate SM Investments.
The bottom line
The final leg of the inflation fight is proving to be difficult for the Fed.
A recent slate of worrying economic data has shown inflation’s stubborn staying power within the broader economy.
“The Fed’s inflation target is 2%, and the bottom line of the inflation discussion is that inflation has started to move sideways at 3%, and this is a problem for the Fed,” said Torsten Slok, chief economist at Apollo Global Management in a note.
The Federal Open Market Committee will likely use this week’s policy meeting to debate on whether inflation continues to cool or if progress has stalled.
While the central bank is widely expected to keep rates unchanged, investors will draw careful scrutiny for any clues about the timing of future rate cuts.
Half of respondents in a CNBC Fed survey indicated the biggest risk is that the Fed cuts too late, while 46% worry the central bank will cut too early.
Still, continued high inflation is judged to be the biggest risk to economic expansion.
Despite the latest run of hot inflation data, market watchers still expect the Fed to stick to three rate cuts.
“We are sticking with three this year, starting in June,” Joe Kalish, chief global macro strategist of Ned Davis Research, said in a note.
“But it would only take two participants to change their views to have the median fall to two cuts from three.”