Stock Market Update

The S&P 500 futures currently trade 47 points below fair value.

Equity indices in the Asia-Pacific region slumped badly Thursday amid the fallout from post-FOMC selling in the U.S., rising energy prices, and the initial sell-the-news response to Micron's (MU) blowout earnings report. Ongoing concerns about the Iran war lasting longer than feared and doing more economic damage than feared through the channel of high energy prices weighed on investor sentiment. The Bank of Japan left its key policy rate unchanged at 0.75%, as expected, with the uncertainty about the Middle East unrest contributing to the decision. It was an 8-1 vote. The lone dissenter (Takata) wanted a 25-basis-point hike.

• In economic data
  • Japan's January Core Machinery Orders -5.5% m/m (expected -9.6%; prior 19.1%) and 13.7% yr/yr (expected 10.5%; prior 16.8%); January Industrial Production 4.3% m/m (expected 2.2%; prior 0.6%) and Capacity Utilization 2.9% (prior 0.5%)
  • Australia's February Employment Change 48.9K (expected 20.8K; prior 26.1K); February Unemployment Rate 4.3% (expected 4.1%; prior 4.1%)

---Equity Markets---

• Japan's Nikkei: -3.4%
• Hong Kong's Hang Seng: -2.0%
• China's Shanghai Composite: -1.4%
• India's Sensex: -3.3%
• South Korea's Kospi: -2.7%
• Australia's All Ordinaries: -1.8%

Major European indices are under selling pressure, clipped by the spike in energy prices that was precipitated by Iran's retaliation on Qatar's LNG facilities at Ras Laffan. Brent crude futures topped $118.00/bbl but are now at $114.34/bbl, up 6.5%. Concerns about a pickup in inflation and a slowdown in growth have cut risk appetite. At the moment, sovereign bond markets appear more concerned with the prospect of higher inflation and an extended delay for additional rate cuts. That concern is reflected in higher yields across European bond markets. The Swiss National Bank kept its key policy rate unchanged at 0.00%, as expected. Sweden's Riksbank said its repo rate is not likely to change for some time. The Bank of England and the ECB will be out with rate decisions later this morning. Both are expected to leave their key policy rates unchanged.

• In economic data:
  • Eurozone's Q4 Labor Cost Index 3.3% yr/yr (prior 3.4%)
  • U.K.'s February Claimant Count Change 24.7K (expected 25.8K; prior 4.7K); January Avg. Earnings Index plus Bonus 3.9% (expected 3.9%; prior 4.2%); January Unemployment Rate 5.2% (expected 5.3%; prior 5.2%)

---Equity Markets---

• STOXX Europe 600: -2.5%
• Germany's DAX: -3.0%
• U.K.'s FTSE 100: -2.8%
• France's CAC 40: -2.2%
• Italy's FTSE MIB: -2.5%
• Spain's IBEX 35: -2.5%