After Germany, now Japan's economy has also fallen into recession, with a 0.4% annualised decline in Q4 2023, raising doubts about the prior central bank's plans to mess with its easy monetary policy. Weak domestic demand, with consumption and capital expenditure both falling, contributed to the recession despite positive external demand from exports. Japan, the world's third-largest economy behind Germany, moved from 0.9% growth to a 0.8% decline to another decline of 0.1%, casting doubt on the Bank of Japan's optimistic forecasts for wage-driven consumption growth. While business surveys and the tight labour market suggest a different story, negative growth and a negative savings rate remain the main concerns for Japan's economic outlook. The UK economy may follow suit if its growth hits the expected figure today.

EQUITY

Wall Street filled more than half the gap after Tuesday's sell-off, which may be the start of market downturn, with small caps and technology leading the charge. Upcoming retail sales data may hint at softer consumer spending, which may revive early Fed rate cuts. Lyft jumped 35% after exceeding profit estimates and announcing to-be positive free cash flow for the first time this year, while Uber also jumped in with almost 15% gain, marking a positive outlook for ridesharing providers.

GOLD

Gold prices are steady near a two-month low, consolidating after Wednesday's selloffs triggered by the hawkish Fed and sticky inflation data. While the dollar's retreat offers a brief assessment period, key U.S. economic releases later today and ongoing Fed commentary will dictate bullion's near-term direction. Expect a continued short term downturn as the market structure shifts into bearish territory.

OIL

Crude prices dropped around 150 basis points after a US inventory showed significant buildups. Recessionary signals from Japan and the euro zone added to demand concerns. This, coupled with a strengthening dollar, overshadowed recent supply disruption worries and potential demand boosts from strategic reserve replenishments. Investors now await the IEA's monthly report and OPEC's March meeting for guidance.

CURRENCY

The ever-stronger dollar rally halted after inflation data pushed it to a 3-month high. Investors consolidated gains, causing the dollar index to slip and the yen to firm on potential intervention by the BoJ. The Euro found some relief in mixed Eurozone data, while Asian currencies remained under pressure from hawkish Fed signals. Despite a technical recession in Japan, the yen's losses were limited while its equity was up.