Market Turmoil: Doubts Over Fed Cuts Shake Investors, ECB on the Horizon

Following Wednesday’s market turbulence, Thursday sees a slight easing of the selloff. While Treasuries maintained their dominance in Wednesday’s closings, Wall Street stock futures remained in the red prior to the bell, mirroring the downward trend in Asia and European bourses earlier.

Of particular concern to inflation observers were the geopolitical developments overnight. Oil prices surged once again amid tensions in the Middle East. Lufthansa, the German airline, announced on Thursday the extension of its flight suspension to Tehran, citing heightened alertness in the region following a suspected Israeli air strike on Iran’s embassy in Syria. An Iranian news agency initially reported the closure of Tehran’s airspace for military drills, but later retracted the statement, denying its issuance.

Since April 1, when Israeli warplanes were suspected of attacking the Iranian embassy compound in Syria, both the region and the United States have been on high alert for potential retaliatory actions by Iran.

Markets are also turning their attention to the commencement of the first quarter earnings season, with JPMorgan, Citigroup, and Wells Fargo scheduled to announce their results on Friday. Analysts anticipate a 5.0% increase in aggregate S&P 500 earnings for the first quarter compared to the previous year, according to LSEG data. This projection marks a decrease from the 7.2% annual earnings growth forecasted at the start of the quarter on Jan. 1.

Several key events are slated for Thursday that may influence U.S. markets:

  • European Central Bank policy decision and press briefing
  • Release of US March producer price index and weekly jobless claims
  • Speeches by Federal Reserve Bank officials Susan Collins, John Williams, Thomas Barkin, and Raphael Bostic
  • Auction of $22 billion of 30-year bonds by the US Treasury
  • Corporate earnings reports from Constellation Brands, Carmax, and Fastenal
  • Eurogroup finance ministers meeting in Brussels
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