Stock Market Update

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

Equity indices in the Asia-Pacific region were mixed on Wednesday with Japan's Nikkei (-0.4%) deepening its retreat from a record high while South Korea's Kospi (+0.5%) remained in record territory. Japanese debt rebounded from the Tuesday plunge in longer tenors, though short end lagged, leaving the 2-yr bond with a slim loss. Japan's Finance Minister Katayama expressed confidence that the bond market will improve and that fiscal sustainability will be maintained. South Korea's exports were up 14.9% yr/yr through the first 20 days of January with chip exports jumping 70.2%. China Securities Journal speculated that the People's Bank of China will delay its next easing move.

• In economic data:
  • Australia's December MI Leading Index 0.1% m/m (last 0.0%)
  • New Zealand's December RBNZ Offshore Holdings 57.5% (last 58.0%)

---Equity Markets---

• Japan's Nikkei: -0.4%
• Hong Kong's Hang Seng: +0.4%
• China's Shanghai Composite: +0.1%
• India's Sensex: -0.3%
• South Korea's Kospi: +0.5%
• Australia's ASX All Ordinaries: -0.3%

Major European indices trade in the red. The U.K.'s inflation accelerated more than expected in December, though the market still believes that the Bank of England could cut its bank rate as early as March. European Central Bank President Lagarde said that central bank will not always backstop fiscal spending if additional debt does not sustain growth. The German government is reportedly lowering its domestic 2026 growth forecast to 1.0% from 1.3%.

• In economic data:
  • U.K.'s December CPI 0.4% m/m, as expected (last -0.2%); 3.4% yr/yr (expected 3.3%; last 3.2%). Core CPI 0.3% m/m, as expected (last -0.2%); 3.2% yr/yr (expected 3.3%; last 3.2%). Input PPI -0.2% m/m (expected -0.1%; last 0.5%) and Output PPI 0.0% m/m (expected 0.1%; last 0.1%). December House Price Index 2.5% yr/yr (expected 1.8%; last 1.7%) and January CBI Industrial Trends Orders -30 (expected -33; last -32)

---Equity Markets---

• STOXX Europe 600: -0.6%
• Germany's DAX: -1.1%
• U.K.'s FTSE 100: -0.1%
• France's CAC 40: -0.3%
• Italy's FTSE MIB: -1.1%
• Spain's IBEX 35: -0.7%