Morning Brief – Futures turn lower

Hawkish rhetoric from Fed officials and further signs of an aggressive US, and Canadian, regulatory clampdown weighed, weighed on market sentiment during the Asian session.

Futures markets also showed a strong downward bias January’s producer price index (PPI). Headline PPI came in at a monthly increase of 0.7%, hotter than the 0.4% expected by economists.

The US dollar also continued to build upside momentum during the Asian session. Traders often prefer to flock to the greenback when market sentiment take a hit.

Chinese shares also took a hit after Chair and CEO of China Renaissance, was reported as not contactable. Shares in the firm dropped as much as 50% in early Hong Kong trading.

Asian equity markets were as follows, Japan’s Nikkei 225 -0.6%, China’s Shanghai Composite -0.1%, Hong Kong’s Hang Seng -0.6%, South Korea’s KOSPI -1% and Australia’s S&P/ASX 200 down -0.8%

Federal Reserve officials also made headlines Thursday with comments suggesting the central bank could be in for a long battle with inflation.

Federal Reserve Bank of Cleveland President Loretta Mester said she was open to another 0.50% hike, more than what her peers voted for during the last monetary policy meeting.

Meanwhile, Federal Reserve member James Bullard said he favours additional rate hikes amid sticky inflation at the Fed’s March meeting.

Bullard said he favoured bringing up the federal funds rate to 5.375% as soon as possible, up from a current level of 4.50%-4.75%.

Economists at JPMorgan raised their Q1 GDP projection to 2% from 1% on the news, noting that the acceleration in retail sales adds to “the goldilocks view of growth without inflation.”

Individual investors have been snapping up stocks at the fastest pace on record as US equity markets have charged higher to start the year.

Over the past month, retail investors funnelled an average of $1.51 billion each day into US stocks, the highest amount ever recorded, according to data from research firm VandaTrack published Thursday.