Pre-Market Pulse 10th April – Equities drift higher, Nvidia slips as competition heats up

Overnight – Equities drift higher, Nvidia slips as competition heats up

Equities closed slightly higher as investors marked time ahead of key inflation data being released tonight. Treasury yields traded lower ahead of the data, giving light relief to the equity market.

The consumer price index inflation data for March due Wednesday is expected to show inflation potentially picking up, though the core measure, which excludes food and energy and is more closely watched by the Fed, is expected to have cooled to a 0.3% pace in March from 0.4% month earlier.  Sticky inflation has been a major point of contention for the Fed in potentially lowering interest rates. A string of officials have warned that high inflation could potentially delay rate cuts this year.

The minutes of the Fed’s March meeting also due on Wednesday will likely provide further clues on the rate path ahead after the central bank guided for 75 basis points of rate cuts this year at this meeting. Traders, however, have been cutting expectations that the Fed will reduce interest rates by as soon as June. The CME Fedwatch tool shows a 54% chance for a 25 basis point cut in June. Yields in the treasury market fell across the board, with the yield on the 10-year Treasury falling 6 basis points lower at 4.36%,

Nvidia fell 2% as a slip below a key technical level of $850 appeared to attract more selling pressure just as rival Intel unveiled that its Gaudi 3 chip that the latter said delivers better performance and uses less power.  Still strong gains in Wolfspeed, GlobalFoundries and Amkor Technology helped keep the chip stocks trending higher with the latter up more than 7% on the day

Google kept the Mag7 afloat with a 1% rise in Alphabet as the company unveiled new custom Arm-chips as well as several partnerships for its cloud business ahead of its Google Cloud Next keynote.

In energy, while Middle East uncertainty continued, the U.S. Energy Information Administration said U.S. crude oil output is set to grow slightly more than earlier estimates this year and next and EIA hiked its global and domestic oil price forecasts. U.S. crude settled down 1.39%, or $1.20 at $85.23 a barrel, while Brent settled at $89.42 per barrel, down 1.06%, or $0.96 on the day.

Meanwhile, spot gold hit a record high for the eighth session in a row, supported by central bank buying and heightened geopolitical tensions, according to analysts. Spot gold added 0.57% to $2,352.23 an ounce. U.S. gold futures gained 0.84% to $2,351.40 an ounce.