CNBC Daily Open: Back to reality

This report is from today's CNBC Daily Open, our new, 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.

All eyes on inflation.

• We look ahead to the U.S. consumer price index report later this week, which will help determine the Federal Reserve's path ahead. We'll also hear more about the Fed's thinking when minutes from the February Federal Open Market Committee meeting are released this week. China's inflation number for March is scheduled for Tuesday, which is also when the Bank of Korea will meet.
• On Friday, the U.S. Labor Department said the country added 236,000 jobs in March, which was broadly in line with expectations but down from the month before, showing that the job market is indeed slowing. That number compares with a revised print of 326,000 jobs in February. The unemployment rate ticked lower from 3.6% to 3.5%. Average hourly earnings rose by 0.3% to push the 12-month increase to 4.2%, the lowest level since June 2021.
• Microsoft is betting big on the company behind ChatGPT. It has reportedly invested a total of $13 billion to partner with OpenAI, which would value the San Francisco-based startup at roughly $29 billion. Microsoft is integrating the startup's technology into its Bing search engine, sales and marketing software, GitHub coding tools, Microsoft 365 productivity bundle and Azure cloud. Wells Fargo analyst Michael Turrin says it could all add up to over $30 billion in new annual revenue for Microsoft.
• Potential for more tension between the U.S. and China lies ahead as a delegation of lawmakers met industry leaders including Disney CEO Bob Iger and Apple CEO Tim Cook after they returned home from a business forum in China. Democrat House member Ro Khanna told CNBC that he expects business leaders to inform the policymakers of any progress they've made in diversifying supply chains out of China and how they use export revenue from China to invest in the United States.
•  PRO The S&P 500 kicked off the second quarter worse than its start to the first quarter — the index fell 0.1% in a shortened trading week, while it gained 7% in January's first week. Here are stocks with the most upside as the second quarter kicks in.

Welcome back from the long weekend (for some of you). Investors certainly deserved a break from the headline-filled mania of recent weeks. But it's time to return to reality — one where market jitters are unlikely to fade anytime soon.

That's because several questions remain front and center. Most importantly: When will the Fed's hiking cycle draw to a close? Last week's U.S. jobs number could pave the way for another rate hike in May but contains clear signs of a slowing economy. Indeed, last week's dismal ISM manufacturing reading and weak ADP jobless claims data paint a bleaker economic picture that many investors think will prompt rate cuts this year — even as policymakers adamantly push back against that notion.

Against that backdrop, the main event this week will be the U.S. consumer price index release on Wednesday. Economists polled by Reuters expect an acceleration to 5.6% on a yearly basis and a 0.4% monthly gain for core inflation, which excludes the volatile food and energy components. At those levels, inflation remains the Fed's biggest problem.

Or does it? The dust has seemingly settled on recent weeks' banking turmoil, but the potential for more drama looms. That means financial stability will need to factor into the Fed's policy calculus as well. We'll likely get more clues on the health of the financial sector when the mega banks kick off what's expected to be a grim U.S. earnings season on Friday.

For now, a positive start for Asian futures is helping ease investors back from the holidays. Asian stocks are pointing to a mixed open, while U.S. futures are also ticking higher after stock markets were closed on Good Friday. Most of Europe will enjoy a four-day weekend and remain closed for Easter Monday.

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