Equity futures continue to point to a slightly higher opening as the market reacts to the March CPI report while waiting for further updates on the geopolitical front.

Total CPI was up 0.9% month-over-month in March (Briefing.com consensus: 0.7%) following a 0.3% increase in February. Core CPI, which excludes food and energy, was up 0.2% month-over-month (Briefing.com consensus: 0.3%) following a 0.2% increase in February.

With these changes, total CPI was up 3.3% year-over-year, versus 2.4% in February, and core CPI was up 2.6% year-over-year, versus 2.5% in February.

The key takeaway from the report is that headline inflation was driven by the index for energy, which rose 10.9% in March, and although core inflation was seemingly subdued in March, the concern is that the energy price shock will bleed through more to core inflation in April.

The S&P 500 futures currently trade seven points above fair value.

Equity indices in the Asia-Pacific region had a solid finish to the week, encouraged by a lack of reports about additional missile strikes in the Middle East. China's CPI deflated again in March while PPI came in above zero for the first time since late 2022. The Bank of Korea left its policy rate at 2.50%, as expected, warning about the risk of higher prices and lower growth resulting from the U.S.-Iran conflict.

• In economic data:
  • China's March CPI -0.7% m/m (expected -0.2%; last 1.0%); 1.0% yr/yr (expected 1.2%; last 1.3%). March PPI 0.5% m/m (expected 0.4%; last -0.9%)
  • Japan's March PPI 0.8% m/m (expected 0.9%; last 0.1%); 2.6% yr/yr (expected 2.4%; last 2.1%). March Bank Lending 4.8% yr/yr (expected 4.4%; last 4.5%)
  • Australia's February Building Approvals 29.7% m/m, as expected (last -7.2%); 14.0% yr/yr, as expected (last 15.7%). February Private House Approvals 0.2% m/m, as expected (last 1.1%)
  • New Zealand's March Business PMI 53.2 (last 54.8)

---Equity Markets---

• Japan's Nikkei: +1.8% 
• Hong Kong's Hang Seng: +0.6%
• China's Shanghai Composite: +0.5%
• India's Sensex: +1.2%
• South Korea's Kospi: +1.4%
• Australia's ASX All Ordinaries: -0.1%

Major European indices are seeking a higher finish to the week. Germany's economy minister voiced opposition to taxing surplus profits of energy companies but also spoke in favor of measures to offset the impact of high energy prices for consumers. Hungary will hold a parliamentary election on Sunday with polls pointing to a tight race.

• In economic data:
  • Germany's March CPI 1.1% m/m, as expected (last 0.2%); 2.7% yr/yr, as expected (last 1.9%)
  • Italy's February Industrial Production 0.1% m/m (expected 0.5%; last -0.6%); 0.5% yr/yr, as expected (last -0.6%)
  • Swiss March SECO Consumer Climate -43 (expected -32; last -30)

---Equity Markets---

• STOXX Europe 600: +0.7%
• Germany's DAX: +1.0% 
• U.K.'s FTSE 100: +0.4%
• France's CAC 40: +0.6%
• Italy's FTSE MIB: +0.7%
• Spain's IBEX 35: +0.7%

The S&P 500 futures currently trade 11 points above fair value.

Just released, total CPI increased 0.9% month-over-month in March (Briefing.com consensus 0.7%) from a prior increase of 0.3%.

Core CPI, which excludes food and energy, increased 0.2% month-over-month (Briefing.com consensus 0.3%) following a prior increase of 0.2%.

Equity futures point to a flattish opening this morning after the major averages notched decent gains in yesterday's session following further optimistic developments on the geopolitical front.

Bloomberg reports that while the Strait of Hormuz remains effectively closed to tanker traffic, other aspects of the ceasefire between the U.S. and Iran appear to be holding ahead of discussions this weekend. WTI crude oil is up slightly this morning, trading around the $ 98-per-barrel mark.

The market faces a key test this morning in the form of the March CPI Report (Briefing.com consensus 0.7%), which will be the first real test of whether inflation is broadening beyond energy into the core basket. Analysts are expecting a hotter headline reading due to the recent surge in energy prices, making the core reading (Briefing.com consensus 0.3%), which excludes food and energy, an important gauge of underlying inflation trends and a key determinant of the Fed's policy outlook going forward.

In corporate news:

• Anthropic is mulling artificial intelligence chips, according to Reuters
• Tesla (TSLA 345.50, -0.07, -0.0%) China sales fell 16% in Q1, according to Electrek.
• Taiwan Semiconductor Manufacturing (TSM 373.80, +8.31, +2.3%) reported that March and Q1 revenues both came in above consensus.

Equity indices in the Asia-Pacific region had a solid finish to the week, encouraged by a lack of reports about additional missile strikes in the Middle East. Japan's Nikkei: +1.8%, Hong Kong's Hang Seng: +0.6%, China's Shanghai Composite: +0.5%, India's Sensex: +1.2%, South Korea's Kospi: +1.4%, Australia's ASX All Ordinaries: -0.1%.

In news:

• China's CPI deflated again in March while PPI came in above zero for the first time since late 2022.
• The Bank of Korea left its policy rate at 2.50%, as expected, warning about the risk of higher prices and lower growth resulting from the U.S.-Iran conflict.

In economic data:

• China's March CPI -0.7% m/m (expected -0.2%; last 1.0%); 1.0% yr/yr (expected 1.2%; last 1.3%). March PPI 0.5% m/m (expected 0.4%; last -0.9%)
• Japan's March PPI 0.8% m/m (expected 0.9%; last 0.1%); 2.6% yr/yr (expected 2.4%; last 2.1%). March Bank Lending 4.8% yr/yr (expected 4.4%; last 4.5%)
• Australia's February Building Approvals 29.7% m/m, as expected (last -7.2%); 14.0% yr/yr, as expected (last 15.7%). February Private House Approvals 0.2% m/m, as expected (last 1.1%)
• New Zealand's March Business PMI 53.2 (last 54.8)

Major European indices are seeking a higher finish to the week. STOXX Europe 600: +0.7%, Germany's DAX: +0.9%, U.K.'s FTSE 100: +0.3%, France's CAC 40: +0.6%, Italy's FTSE MIB: +0.7%, Spain's IBEX 35: +0.6%.

In news:

• Germany's economy minister voiced opposition to taxing surplus profits of energy companies but also spoke in favor of measures to offset the impact of high energy prices for consumers.
• Hungary will hold a parliamentary election on Sunday with polls pointing to a tight race.

In economic data:

• Germany's March CPI 1.1% m/m, as expected (last 0.2%); 2.7% yr/yr, as expected (last 1.9%)
• Italy's February Industrial Production 0.1% m/m (expected 0.5%; last -0.6%); 0.5% yr/yr, as expected (last -0.6%)
• Swiss March SECO Consumer Climate -43 (expected -32; last -30)

[BRIEFING.COM] The S&P 500 (+0.6%), Nasdaq Composite (+0.8%), and DJIA (+0.6%) saw a meaningful extension of yesterday's gains after shaking off some early apprehension tied to lingering geopolitical uncertainty.

The major averages spent most of the morning in modestly negative territory as reports indicated that the Strait of Hormuz remained largely closed to tanker traffic and that Israel continued strikes against Hezbollah in Lebanon, prompting threats from Iran to abandon the fragile two-week ceasefire reached Tuesday night.

Stocks found their footing shortly before midday following a Reuters report that Israeli Prime Minister Benjamin Netanyahu directed his aides to open direct negotiations with Lebanon. Those talks are set to begin next week, and Israel has stated that it will continue to launch strikes against Hezbollah in the interim, which could lead to further volatility.

Still, the headline prompted a decisive upward move in equities and a considerable drop in oil prices. Crude oil futures settled today's session $3.49 higher (+3.7%) at $97.89 per barrel, well off session highs that saw WTI crude eclipse the $102 per barrel mark.

The energy sector (-1.2%) ceded its earlier gains in turn, finishing firmly lower. On an unrelated note, Texas Pacific Land Trust (TPL 377.97, -70.31, -15.68%) was the worst-performing S&P 500 component today after the sudden death of Murray Stahl, the company's largest shareholder and longtime board member.

The health care sector (-0.2%) was the only other S&P 500 sector to close without a gain, as the other nine sectors moved higher.

After what felt like a weeks-long drought in meaningful corporate news, the recent improvement in the geopolitical backdrop has helped reignite momentum in the AI trade, with several notable headlines involving hyperscalers emerging today.

The consumer discretionary sector (+2.5%) led the advance, supported by a sharp gain in Amazon (AMZN 233.65, +12.40, +5.60%) after CEO Andy Jassy released his annual shareholder letter, reiterating the company's willingness to make significant AI investments. The company also announced plans to invest $25 billion in data centers in Mississippi.

Meta Platforms (META 628.39, +15.97, +2.61%) also captured a solid gain after announcing an expansion of its $21 billion AI infrastructure deal with CoreWeave (CRWV 92.00, +3.10, +3.49%).

Some of those gains also made their way downstream, as stocks set to benefit from the AI data center buildout cycle put up solid performances. Corning (GLW 169.80, +4.70, +2.85%), Caterpillar (CAT 787.07, +15.49, +2.01%), and GE Vernova (GEV 968.02, +31.95, +3.41%) all traded to fresh record highs today, with the latter two names helping the industrials sector (+1.0%) notch a solid gain.

Meanwhile, the information technology (+0.4%) notched a more modest gain. There was some renewed AI enthusiasm, with Sandisk (SNDK 851.57, +70.67, +9.05%) posting another monster gain, while large chip makers such as NVIDIA (NVDA 183.94, +1.86, +1.02%) and Intel (INTC 61.72, +2.77, +4.70%) helped push the PHLX Semiconductor Index 2.1% higher.

However, those gains came at the expense of software stocks such as ServiceNow (NOW 89.81, -7.66, -7.86%) and Palantir Technologies (PLTR 130.54, -10.22, -7.26%), which pushed the iShares GS Software ETF -3.9% lower.

Elsewhere, the consumer staples (+0.9%) and utilities (+0.8%) sectors opened to solid gains amid the geopolitical uncertainty, and maintained the bulk of the gains throughout the session. Outside of the S&P 500, the Russell 2000 (+0.6%) and S&P Mid Cap 400 (+0.3%) followed a similar trajectory to the major averages.

All told, today's session marked another constructive step forward for equities, as improving geopolitical conditions provided a supportive backdrop for a continued rebound in the broader market while enthusiasm for the AI trade began to return. The market will face an important test tomorrow in the form of the March CPI report (Briefing.com consensus 0.3%), which will be the first real test of whether inflation is broadening beyond energy into the core basket.

U.S. Treasuries endured some Thursday volatility that produced a modest loss in the long bond while 5s and shorter tenors eked out slim gains. Today's $22 billion 30-year bond reopening was met with decent, but unimpressive demand. The 2-year note yield settled down one basis point at 3.78%, and the 10-year note yield finished unchanged at 4.29%. 

• S&P Mid Cap 400: +6.9% YTD
• Russell 2000: +6.2% YTD
• DJIA: +0.3% YTD
• S&P 500: -0.3% YTD
• Nasdaq Composite: -1.8% YTD

 Reviewing today's data:

• February Personal Income -0.1% (Briefing.com consensus 0.5%); Prior 0.4%, February Personal Spending 0.5% (Briefing.com consensus 0.6%); Prior was revised to 0.3% from 0.4%, February PCE Prices 0.4% (Briefing.com consensus 0.4%); Prior 0.3%, February PCE Prices - Core 0.4% (Briefing.com consensus 0.3%); Prior 0.4%
  • The key takeaway from the report is that it reflects sticky inflation pressure before the Iran war started, so it won't sway the Fed from sticking with a wait-and-see policy stance.
• Weekly Initial Claims 219K (Briefing.com consensus 215K); Prior was revised to 203K from 202K, Weekly Continuing Claims 1.794 mln; Prior was revised to 1.832 mln from 1.841 mln
  • The key takeaway from the report is that continuing claims hit their lowest level since May 11, 2024.
• Q4 GDP - Third Estimate 0.5% (Briefing.com consensus 0.7%); Prior 0.7%, Q4 GDP Deflator - Third Estimate 3.7% (Briefing.com consensus 3.8%); Prior 3.8%
  • The key takeaway from the report is that it suggests the economy closed last year on a sluggish note; however, it wasn't quite as soft as it appears when taking into account that real final sales to private domestic purchasers were up 1.8%.
• February Wholesale Inventories 0.8% (Briefing.com consensus -0.2%); Prior -0.3%