CPI growth decelerates to 6.8% as expected

APAC equity markets

Asia Pacific region (APAC) equity markets traded lower on Wednesday, following the lead of US indices. US banks led the declines as investors are concerned about a possible credit rating downgrade by Fitch.

Reserve Bank of New Zealand

As expected, the Reserve Bank of New Zealand kept its interest rate on hold for a second consecutive month. The Official Cash Rate remains at 5.5% and should do so. "for the foreseeable future to ensure annual consumer price inflation returns to the 1% to 3% target range," according to the Reserve Bank of New Zealand (RBNZ) statement.

The Reserve Bank of New Zealand continues to forecast the official cash rate to peak at its current level of 5.5% with some upside risk of another hike, and, conditional on its central economic outlook, the cash rate would need to remain at around its current level for longer than was assumed in its May statement.

Federal Open Market Committee

The markets also await Federal Open Market Committee (FOMC) minutes on Wednesday evening. At its last meeting, the Federal Reserve raised its interest rate target by a quarter of a percentage point to a range of 5.25%–5.5%.

This was the 11th in its last 12 meetings, to a level last seen in 2007. Regarding upcoming decisions, Jerome Powell left the door open. The Federal Reserve (Fed) Chair made no promises either way, with a September meeting considered. "live" for another rate increase.

UK CPI

In the UK, the consumer price index rose 6.8% in July year-on-year (YoY), in line with expectations. Also in line is the retail price index, which is up by 9% YoY, Aviva posted a group operating profit up 8% to £715 million.

General Insurance

General Insurance gross written premiums rose 12% to £5.27 billion. The insurer announced an interim dividend of 11.1 pence, up 8%. Over in the US, Target is due to report earnings before the US opening bell. The street expects earnings of $1.47 per share, a substantial improvement on the 39 cents recorded in the same quarter a year ago. Revenue, however, is anticipated to be lower than a year ago, at $25.33 billion. This will be the first drop in sales in three and a-half years.

Cisco

After market close,Cisco their stock has performed rather well over the past few months, on an ascending trend since its October 2022 lows. And the earnings expected tonight reflect this performance. Analysts anticipate earnings of $1.06 per share, which would be a 27.7% increase on the same quarter a year ago. Revenue is seen rising 15% to $15.05 billion.

Oil overview

Oil prices lost about two dollars in 24 hours.West Texas Intermediate (WTI) and Brent fell on the back of the latest China data. Lower than expected industrial output and retail sales reignited concerns around China's oil demand. On Tuesday evening, the latest data from the API showed a 6.2 million barrel drop in crude oil stocks. Gasoline inventories rose by 700,000 barrels, and distillates fell by 800,000 barrels.