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Fed speakers, corporate earnings, data deluge and Lagarde - what's moving markets

By Peter Nurse -- President Biden looks to appoint a new Fed vice chair, with a number of policymakers set to speak Thursday. Corporate earnings continue to flood in, while there are also a number of economic data releases to study, including the weekly jobless claims.

Chinese growth provides crude markets with confidence, while ECB head Christine Lagarde cements another rate hike. Here's what you need to know in financial markets on Thursday, February 16th.

1. Biden looks to replace Brainard on Fed board

President Joe Biden’s decision to name Vice Chair Lael Brainard to be his top economic adviser has resulted in a vacancy in the role of Fed vice chair, with the Wall Street Journal suggesting Chicago Fed President Austan Goolsbee is in the frame.

Goolsbee only took on his role in Chicago last month, and previously was an economic adviser to President Barack Obama and a professor of Economics at the University of Chicago Booth School of Business.

Thursday sees a number of his colleagues scheduled to speak, including Loretta Mester, Lisa Cook, and James Bullard, and their comments will be studied carefully after this week’s inflation release.

The January consumer price index came in stronger than expected earlier this week, forcing market participants to rethink the Federal Reserve’s path. They now expect the Fed to continue raising interest rates through June and no longer see a rate cut as a sure bet this year.

2. U.S. stocks to open just lower; earnings in focus

U.S. stock markets are set to open marginally lower as investors digest more corporate earnings ahead of the release of a number of significant economic data releases [see below].

By 06:25 ET (11:25 GMT), Dow Jones futures were down 32 points, or 0.1%, S&P 500 futures were down 0.1%, and Nasdaq 100 futures were down 0.1%.

Earnings reports from major retailers from the holiday quarter are set to pour in next week, and that could give investors something to think about when it comes to the health of the American consumer.

Ahead of that, results are due from the likes of Applied Materials (NASDAQ:AMAT), Hasbro (NASDAQ:HAS), and Paramount Global (NASDAQ:PARA) before the bell, while DoorDash (NYSE:DASH) and DraftKings (NASDAQ:DKNG) are scheduled for after the close.

Roku (NASDAQ:ROKU) will also be in the spotlight after the streaming device firm’s stock soared premarket and beat quarterly expectations, while Shopify (NYSE:SHOP) slumped after the e-commerce company disappointed with its guidance for the current quarter.

3. U.S. data deluge

U.S. retail sales increased the most in nearly two years in January, according to data released Wednesday, providing investors with more confidence in the economic outlook, even as the Federal Reserve continues with its aggressive monetary tightening.

This has got investors thinking that the resilience of the U.S. economy may still result in a soft landing, with steady growth and low unemployment co-existing with slowing inflation and higher interest rates.

This theory will be put to the test Thursday as there is a barrage of economic data releases scheduled for release.

Weekly jobless claims will provide a gauge of the health of the labor market; producer prices could provide a guide to underlying inflationary pressures; housing starts will be an important metric for real estate investors; while the Philly Fed index is likely to provide a measure of business sentiment.

4. Lagarde signals 50-basis-point hike in March

The European Central Bank is set to raise interest rates by another half-point next month. ECB President Christine Lagarde made that much clear in a speech to European Union lawmakers in Strasbourg on Wednesday, as she pointed out price pressures were still strong with underlying inflation remaining elevated.

What happens next, though, remains unclear.

There are a number of hawkish ECB officials who have stated that March’s hike is unlikely to be the last in what’s already the most aggressive monetary-tightening cycle in the institution’s history.

However, Lagarde said the policymakers “will then evaluate the subsequent path of our monetary policy” after next month’s increase, with any future decision likely to be data-dependent.

Euro zone inflation could fall faster than earlier thought, ECB policymaker Pablo Hernández de Cos said on Wednesday, while Fabio Panetta, Italy's appointee on the ECB's board, called for caution earlier Thursday, saying a streak of hikes that saw the central bank raise rates by 300 basis points since July had yet to be completely felt by the economy.

5. Crude edges higher on China demand confidence

Crude oil prices edged higher Thursday, boosted by fresh evidence of a recovery in demand for energy in China, the world’s largest importer of crude, as the country reacts to the lifting of its severe COVID-19 restrictions.

China's January air passenger traffic rose 34.8% from a year earlier, the aviation regulator said at a news conference on Thursday.

This increased confidence follows on from the International Energy Agency lifting its forecast for oil demand this year by 100,000 barrels a day from last month’s forecast, expecting China to make up almost half of the additional 2 million barrels per day.

This has overshadowed the news from the Energy Information Agency that U.S. crude oil stocks soared last week by 16.3 million barrels to 471.4 million barrels, the highest level since June 2021.

By 06:25 ET, U.S. crude futures were up 0.2% at $78.75 a barrel, while Brent crude was up 0.1% at $85.49 a barrel.


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