CNBC Daily Open: Muted CPI gives markets best day since November

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Core CPI below estimates
The U.S. consumer price index increased a seasonally adjusted 0.4% on the month in December, putting the 12-month inflation rate at 2.9%, the U.S. Bureau of Labor Statistics reported Wednesday. Core inflation, which excludes food and energy prices, rose 0.2% on a monthly basis and 3.2% for the year. The annual reading was down 0.1 percentage points from November. Both core readings were also 0.1 percentage point below expectations.

Ceasefire deal between Israel and Hamas
Israel and Hamas on Wednesday reached a ceasefire and hostage release deal to end a 15-month war in the Gaza Strip. The Israeli security cabinet must still vote on the agreement before its implementation. If approved, the first phase of the deal will include a full ceasefire and the withdrawal of Israeli forces from the populated areas of the Gaza enclave, U.S. President Joe Biden said.

Markets enjoy best day in months
U.S. stocks popped on Wednesday for their best day since November, on the back of the cooler-than-expected inflation reading and Treasury yields easing. Asia-Pacific markets tracked Wall Street higher Thursday. South Korea’s Kospi index advanced more than 1% after the Bank of Korea unexpectedly kept its benchmark rate unchanged at 3%. The BOK also warned that the country’s gross domestic product is “highly likely” to miss forecasts for 2024 and 2025.

TSMC sees record year in sales
Taiwan-listed shares of Taiwan Semiconductor Manufacturing Company jumped around 3.8% after the company reported fourth-quarter profit and revenue that beat LSEG consensus estimates. The company released its December revenue last week, bringing its annual total to 2.9 trillion New Taiwan dollars ($88 billion) — its highest annual sales since the company went public in 1994.

Big banks blew past earnings estimates
JPMorgan Chase and Goldman Sachs handily beat Wall Street estimates on both profit and revenue for the fourth quarter. JPMorgan executives said the bank will be boosting share buybacks even as CEO Jamie Dimon in May called the stock expensive. Separately, Goldman CEO David Solomon said at an event after the bank’s earnings call that IPO activity is “going to pick up” because of “an improved business environment.”

[PRO] Who could buy Ubisoft?
Ubisoft appointed advisors on Jan. 9 to review its business direction. That’s stirred up speculation over who a possible buyer could be. CNBC’s Ryan Browne spoke to industry analysts to find out who might be a likely candidate to take over Ubisoft if the French gaming publisher does put itself up for sale.

Indeed, as CNBC’s Jeff Cox noted, “Much of the move higher in the CPI came from a 2.6% gain in energy prices for the month, pushed higher by a 4.4% surge in gasoline. That was responsible for about 40% of the index’s gain, according to the BLS.”

“Today’s CPI number takes additional rate hikes off the table, which some market participants were beginning to prematurely price in,” said John Kerschner, head of U.S. securitized products and portfolio manager at Janus Henderson Investors.

The U.S. 10-year Treasury yield fell sharply, and is now 4.655%, compared with last Friday’s close of 4.774%, as traders moderated their interest rate expectations. 

That gave stocks room to breathe. The S&P 500 jumped 1.83%, the Dow Jones Industrial Average climbed 1.65% and the Nasdaq Composite popped 2.45%. It was the best day for all three major averages since Nov. 6.

Upbeat earnings reports by banks also added to the cheer. Their financial results often serve as a forecast for the general direction of the economy: Banks’ toplines expand when businesses and consumers undertake more financial activity, which, in turn, help to grow the economy.

For investors, the stars were aligned on Wednesday. But just as the skies constantly shift, volatility, in the form of a new incoming U.S. administration and policies, remain.

— CNBC’s Jeff Cox, Hakyung Kim and Lisa Kailai Han contributed to this report.