U.S. CPI ahead, Chinese trade data, Saudi Aramco dividend – what’s moving markets

Investing.com — U.S. inflation data looms ever larger on the horizon, while China unveils its latest trade data and oil giant Saudi Aramco announces a plan for a new dividend policy despite a recent slip in energy prices.

1. All eyes on U.S. inflation

U.S. stock futures edged lower as investors geared up for the release of key inflation data out of the world’s largest economy later this week.

At 05:02 ET (09:02 GMT), the contract was down by 112 points or 0.33%, traded 14 points or 0.34% lower, and dipped by 54 points or 0.41%.

The latest data on U.S. , due out on Wednesday, is likely to provide further clues about the path ahead for the Federal Reserve’s policy tightening cycle. The , which strips out volatile items like food and energy, is seen slowing marginally on an annual basis.

The U.S. central bank raised by 25 basis points last week, and signaled that it may be at the point of pausing its recent campaign of borrowing cost hikes aimed at corralling inflation.

But any signs of persistently sticky inflation could lead the Fed to take a more hawkish approach in its upcoming policy decisions.

2. China’s sluggish post-pandemic recovery

Chinese imports slipped by more than anticipated in April, while export growth decelerated, in a possible sign that local demand in the world’s second-largest economy remains constrained despite a recent post-COVID reopening.

in China dropped by 7.9% during the period, further slowing from a decline of 1.4% in March. Economists had estimated that the figure would contract by 5.0%.

, meanwhile, moved up by 8.5% on an annual basis, topping expectations. Yet the expansion was not as fast as the prior month, further pointing to a mixed recovery as the country’s crucial manufacturing sector struggles.

The trade data may present a challenge for nations with large exposure to Chinese goods — a notion that led to a softening in a slew of Southeast Asian currencies on Tuesday.

3. Saudi Aramco surges

Saudi Aramco (TADAWUL:) saw its shares spike after the world’s biggest oil firm announced that it intends to roll out a new dividend policy even as its first-quarter income was hit by lower energy prices.

In a statement on Tuesday, the group said that this new performance-linked payout will be between “50% to 70% of [its] annual free cash flow, net of the base dividend and other amounts including external investments.”

The funds could help bolster returns to the Saudi government, which is aiming to use the proceeds generated by Aramco to help pay for a massive pivot of the economy away from its current dependence on oil production. Riyadh is Aramco’s largest shareholder.

Potentially complicating this strategy has been a recent slip in crude prices. Aramco’s net profit fell by just under a fifth to $31.88 billion in the three months ended on March 31, missing Bloomberg consensus expectations, driven by these declines.

4. Oil prices dip

Oil prices inched lower, paring back earlier gains, with investors keeping a wary eye on the upcoming U.S. inflation data.

At 05:03 ET, fell by 0.79% to $76.41 a barrel, while crude futures dropped by 0.78% to $72.58 per barrel.

Prices are still down substantially for the year as markets awaited the latest consumer price index out of the U.S. – the world’s top oil consumer. Trading ranges are tipped to remain fairly tight until the release of the figures, according to analysts cited by Reuters.

5. Palantir’s AI focus

Shares in Palantir (NYSE:) jumped by more than 19% in premarket hours trading in the U.S. on Tuesday after the big data analytics company hiked its full-year outlook and hinted at strong demand for its new artificial intelligence platform.

The Denver-based firm known for its ties to government agencies said it now expects to post adjusted operating profit from operations of $506M to $556M, up from its prior estimate of $481M to $531M. Revenue is also seen at between $2.185B to $2.235B, above the previous guidance of $2.18B to $2.23B.

Driving the rosy expectations were Palantir’s first-quarter , which saw income from operations unexpectedly swing back to profit thanks in part to strong U.S. commercial revenue.

In a statement, Co-founder and Chief Executive Officer Alex Karp predicted that the company would be profitable in each quarter until the end of 2023, citing an expected “depth of engagement with” its new AI system that is “without precedent.”

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