[ad_1]
Market rolls
See for:
EU long-term interest rates; Germany, Italy CPI; Updates from E.ON, TUI, Avast, Deliveroo, Prudential, Admiral, Provident Financial, ABN AMRO, Ahold Delhaize
Opening call:
Europe faced another cautious opening session as investors braced for key US inflation data. In Asia, stocks were mostly lower, with the dollar, Treasuries and commodities all weaker. On the data front, China’s consumer price inflation rose to the highest level in two years, but 2.7% annual CPI growth was expected by consensus.
Shares
European stocks may open in the red on Wednesday as concerns over U.S. inflation data loom and a sell-off in semiconductor stocks on Wall Street drag on investor sentiment.
Hopes that S&P 500 inflation was briefly higher helped the S&P 500 gain more than 13 percent from June’s lows as some investors embraced the theory that slowing inflation could force the Federal Reserve to tighten monetary policy at a less aggressive pace.
However, many analysts and several senior Fed officials have warned that hopes for such a change may be premature.
“For traders, there is an inherent risk associated with the expectation that inflation will remain at 9.1%, because any exaggerated shock could easily create fears of another sharp increase due to Friday’s job openings,” said Joshua Mahoney, market analyst at IG.
“with [U.S.] As the earnings season draws to a close, there is a distinct possibility that attention will turn to the worrisome outlook for economic and monetary policy ahead.
Warnings from chipmaker Stewart’s Nvidia and Micron Technology helped push the Nasdaq to its third straight daily loss on Tuesday, while the Dow and S&P 500 suffered more light losses.
Read: Chipmakers Expect Demand to Expand Beyond PCs, Smartphones
Economic Awareness:
U.S. inflation is likely to ease in July, but there could be unpleasant surprises, Amherst Pierpont said.
“In fact, every set of inflation data [including wage measures] The last two or three months have brought a big surprise.”
Amherst Pierpont saw the key monthly measure drop to 0.6% in July from 0.7% in June, versus the 0.5% consensus. He said the decline in energy prices could cause a sharp fall in the headlines and prevent rising inflation expectations.
But Amherst Pierpont said, “There is a growing concern that inflation is taking root. When consumers and businesses see and suffer from prolonged periods of high inflation, they begin to increase their expectations.”
Forex:
The dollar continued to weaken in Asia in cautious trading ahead of the US July CPI report.
MUFG Bank said the deal was a slight cooling off of core inflation but with core inflation and such a scenario, a 75bp hike by the Fed in September remains on the table.
Silicon Valley Bank even fueled higher-than-expected CPI estimates, which could further weaken sentiment in equity markets and send the dollar down. But a weak CPI could signal to the market that it might be a soft landing, a bullish sign for stocks that should cause the dollar to sell off.
—
Strong demand for Norwegian energy exports keeps the Norwegian krone well supported, Rabobank said.
“The absence of an energy crisis in the face of the Eurozone should allow for a moderate downward trend in the EUR/NOK.”
Rabobank said Norway will not face gas and oil supply shortages, unlike other European countries suffering from the conflict between Russia and Ukraine, which will see EUR/NOK fall to 9.40 in the next 12 months.
Bonds:
U.S. bond yields edged lower in Asia on Tuesday after traders sold off government debt, sending the 2-year yield to its highest level in two months.
The 10-year Treasury yield fell sharply from a multi-year high in mid-June, partly because inflation has peaked and the Fed may not need to be as aggressive in raising interest rates as first feared.
They are pricing in a 67.5% chance that the Fed will raise interest rates by another 75 basis points to a range between 3% and 3.25% at its September 20-21 meeting. According to Fed funds futures, the central bank is expected to keep its borrowing costs mostly between 3.5% and 3.75% until next March.
Bank of America estimates that the 2-year-10-year curve could invert by as much as 0.85 pp if investors bid for Fed funds at a terminal rate of 4% or higher.
Power:
Crude oil prices extended losses in heavy Asian trade as investors weighed renewed supply-related issues alongside signs of rising demand.
Russian pipeline operator Transnef said Ukraine could halt the flow through the pipeline, potentially damaging up to 250,000 barrels of crude oil per day, according to ANZ. However, there are also early signs of a recovery in demand for raw materials in China, ANZ added.
Late Tuesday, the API reported that U.S. crude oil inventories rose by a record 2.2 million barrels last week, while gasoline supplies fell by 627,000.
The mixed-to-hidden results were released from the EIA. The median forecast in a WSJ survey showed that the EIA report showed crude inventories rising by 200,000 barrels and gasoline supplies falling by 500,000 barrels.
Metals:
Gold futures edged lower after prices hit a six-week high on Tuesday, peaking at $1,812.
Goldman Sachs said bullion could trade sideways as the market continues to weigh the balance between Fed tightening and risks to economic growth. He expects prices to reach $1,850/oz in three months before rising to $1,950/oz in six to 12 months.
—
Base metals futures also dipped in Asia.
Aluminum futures fell on signs of increased supply, according to data from the Shanghai Metals Market [SMM] China’s aluminum production rose 6.7 percent to 3.5 million tons in July.
SMM data showed aluminum slabs in Sichuan province had lost 190,000 tonnes of output due to an accident, and this latest disruption will further strengthen the market, ANZ said.
—
Iron ore futures were weak ahead of the US CPI report, although losses could be limited as signs of stability emerged in steel markets.
Producers in Europe have moderated expectations of increased energy costs this quarter, particularly in Germany, Rystad Energy said.
Today’s main news
China’s inflation has reached its highest level in two years
China’s consumer price inflation hit its highest level in two years, official data showed on Wednesday, driven by higher pork prices.
The consumer-price index rose 2.7% in July, up from 2.5% in June, the Office for National Statistics said.
Chipmakers expect demand to expand beyond PCs, smartphones.
The chip industry, which has been buoyed by a slump in laptop sales, is recovering from a broader and sharper slowdown as semiconductor companies prepare to spend billions of dollars on new factories.
“The market is worse than we thought,” Mark Murphy, chief financial officer of memory maker Micron Technology Inc., said on Tuesday. That day, President Biden signed an investment plan that would allocate more than $50 billion to support the future of U.S. chip development and production.
The $27 billion Green Funds Inflation Relief Act could spur private investment.
The energy package recently passed by the Senate includes $27 billion in so-called green banks to channel money into renewable projects, although the biggest beneficiaries will ultimately be private sector investors.
The bill allocates the money to the Greenhouse Gas Reduction Fund, about $20 billion in national or state funds overseen by the Environmental Protection Agency. The rest of the money is designed to go to state and local recipients.
Faster wage growth will put pressure on US inflation
Workers’ wages are rising rapidly, contributing to the highest US inflation in four decades.
Average hourly earnings rose 5.2 percent in July from a year earlier, and annual wage growth has topped 5 percent this year, the Labor Department said Friday. The rapid earnings growth adds to other evidence that wages continue to rise as employers try to find and retain workers in a tight labor market.
Explosions at the Russian airport in Crimea
Explosions at a Russian air force base in Crimea prompted the evacuation of local residents as Ukrainian officials vowed to liberate the Gulf, although Kyiv did not claim responsibility for the blasts.
Russia’s Defense Ministry said the explosions were caused by air force munitions and that no shots were fired at the center, as Ukraine retaliated against the move to wrest control of the southern part of the country from Russian control. . The ministry said that there were no injuries to the planes parked there and no injuries were reported.
Elon Musk sells nearly $7 billion worth of Tesla stock amid uncertainty on Twitter
Elon Musk has sold nearly $7 billion of Tesla Inc stock in recent days amid uncertainty over the fate of his $44 billion deal to buy Twitter Inc, regulatory filings show.
Mr. Musk, Tesla’s chief executive and largest shareholder, sold about 7.9 million shares between Friday and Tuesday, giving him a 15% stake in the company, according to the filings.
Coinbase posts steep second-quarter loss amid Crypto meltdown
Coinbase Global Inc. It reported a surprisingly large second consecutive quarterly loss caused by the crypto market’s spring meltdown.
Coinbase lost $1.1 billion, or $4.98 a share, in the second quarter, the company said on Tuesday, compared to a profit of $1.6 billion, or $6.42 a share, a year ago. Revenue fell to $808 million from $2.2 billion a year ago.
(More to follow) Dow Jones Newswires
August 10, 2022 00:30 ET (04:30 GMT)
Copyright (c) 2022 Dow Jones & Company, Inc.
[ad_2]
Source link
