A trader reacts as a screen displays the Fed rate announcement on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 31, 2024.Â
Brendan McDermid | Reuters
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 todayÂ
Sony tops estimates
Sony‘s quarterly revenue topped estimates, getting a boost from its PlayStation gaming business and financial services unit. The Japanese tech giant’s gaming business has remained robust as users continue to buy the flagship PlayStation 5 console.
Indonesia elections
Indonesia heads to the polls Wednesday as the world’s third-largest democracy seeks to elect a successor to President Joko Widodo, who has served the maximum two five-year terms. Defense Minister Prabowo Subiantois seen as the leading contender in the race, based on various opinion polls ahead of the elections.
Bitcoin retreats
Cryptocurrencies fell on Tuesday tracking the broader market sell-off. Bitcoin was last down by 0.8% at $49,658.57 according to Coin Metrics. “Bitcoin is an aspirational store of value … and therefore its price is in part influenced by monetary policy,” said Jurrien Timmer, Fidelity Investments’ director of global macro.
[PRO]Â Japan’s bull caseÂ
Japan is fast emerging on investors’ radar, and this has been reflected in the stock market’s recent bull run. Morgan Stanley highlighted there’s a “rising likelihood” of its bull case target of 2,800 for the Topix index coming into play, implying an upside of more than 7%.
The bottom line
January’s hotter read on U.S. inflation wasn’t what Wall Street hoped to see.Â
Investors were obviously disappointed as the data reflected inflation’s stubborn staying power.Â
The dismal news jolted markets as bond yields spiked. The Dow saw its biggest decline since March 2023 and even the Russell 2000 was hammered, sinking nearly 4% for its worst session since June 2022.Â
Nearly all metrics in the latest consumer price index surprised markets on the upside.
Overall CPI rose at an annual rate of 3.1% in January, compared with estimates for 2.9%. Â But core CPI â a measure that strips out food and energy prices and is considered a better gauge of underlying inflation â rose 3.9%, above the 3.7% forecast.
While inflation has been on a downward trend since its pandemic-era peak, the latest data certainly won’t be welcome news for the Fed.
It showed getting to the central bank’s 2% inflation target may prove tougher than expected, which could result in elevated interest rates for longer.
Fed Chair Jerome Powell recently noted that the central bank wants to see more evidence that inflation is firmly under control before the Fed would consider lowering interest rates.Â
Tuesday’s CPI report underscores the Fed’s concerns and muddies the water on the timing of rate cuts.
Whether the latest data is a one-off reading or signals lingering price pressures within the broader economy remains to be seen.
But it does stoke worries that beating inflation isn’t going to be easy and it will be a bumpy ride.