© Reuters

By Peter Nurse

Investing.com — The Federal Reserve has put the idea of ​​a recession back on the agenda, and investors will study producer prices and unemployment claims for more clues on the health of the US economy. Elsewhere, shares of the Chinese e-commerce giant Ali Baba SoftBank slumped on a report that it was ready to dump most of its stake.

1. Recession on the agenda

Signs of cooling cheered investors on Wednesday, but much of that goodwill evaporated after the last Federal Reserve meeting that policymakers now expect a “mild recession” this year.

Fed officials expressed concern about the health of the nation’s regional banks, suggesting that further moves could depend on credit conditions.

However, it’s important to note that the Fed’s last meeting was held when the banking crisis was in full flow as a result of the collapse of Silicon Valley banks, and the situation is less stressful now.

Earnings reports from major U.S. banks starting Friday will be more closely scrutinized than before, but before that will come in the form of more inflation data, which is expected to moderate from the same period last year, and which is expected to inch up from the previous week. more

2. Alibaba slumps on report of SoftBank’s share sale

Alibaba (HK:) (NYSE:) shares fell sharply in Asia on Thursday after a report in the Financial Times indicated that SoftBank (TYO:) (OTC:) plans to shed almost all of its holdings in the Chinese e-commerce giant.

The Japanese investment house has battled a sharp downturn in its technology holdings over the past year, and has previously used its stake in Alibaba to generate cash. It already made just over $7 billion from the sale of Alibaba stock this year, after a record $29B in sales in 2022.

The new move will leave SoftBank with a holding of less than 4% of Alibaba, at one point controlling as much as 34%.

Alibaba’s announcement last month of plans to split the conglomerate into six units was well-received, boosting share prices after nearly two years of intense regulatory scrutiny from the Chinese government.

3. Future Edge is superior; Set to report delta income

U.S. futures traded slightly higher on Thursday, as investors digested cooling consumer prices as well as the possibility of a recession later in the year.

At 05:00 ET (09:00 GMT), the contract gained 20 points, or 0.1%, gained 4 points, or 0.1%, and added 12 points, or 0.1%.

Investors have more inflation data to study on Thursday in the form of March producer prices as well as weekly jobless claims, but activity is likely to be limited ahead of the start of the quarterly earnings season on Friday, with major banks leading the way.

Elsewhere, Delta Air Lines (NYSE: ) is scheduled to report its quarterly numbers, and analysts will hear what the carrier has to say about labor and fuel costs and travel demand.

4. After China’s export boom

China’s exports rose unexpectedly last month, offering optimism that the world’s second-largest economy could recover quickly from austerity caused by the country’s severe zero-covid policy.

March rose 14.8% from a year earlier, snapping five consecutive months of declines, with Chinese officials citing growing demand for electric vehicles for the surprise jump.

Investors will now look to see how sustainable this improvement will be given the expected economic slowdown in key export markets the US and EU in the second half of the year.

5. Oil prices steady ahead of monthly OPEC report

Crude prices traded below the flatline on Thursday, with the Fed talking about a potential slowdown [see above] Taking the edge off the recent rally.

By 05:00 ET, futures were down 0.1% at $83.19 a barrel, while the contract was down 0.2% at $87.22 a barrel.

The imminent release from the Organization of the Petroleum Exporting Countries has also prompted warnings

It is due later in the session and is expected to signal more on crude demand and supply after the cartel unexpectedly cut production earlier this month.

Both benchmarks rose more than 2% on Wednesday to their highest in more than a month on expectations that the Federal Reserve may stop hiking as U.S. inflation data cools.

Traders largely ignored the unexpected rise in US crude, as much of the rise was driven by releases from the Strategic Petroleum Reserve.

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