Market Summary
US Inflation Eases as Fed Hike Bets Fall: Global stocks climbed toward record highs, while bonds extended gains after subdued U.S. inflation data eased concerns about an imminent Federal Reserve rate hike. U.S. headline CPI is expected to slow to 3.4% YoY from 3.5%, while core inflation is forecast to ease to 2.5% from 2.6%. Combined with the cooler-than-expected NFP report, the data has pushed markets to price the probability of a September Fed hike down to around 34.6%. The S&P 500 closed within touching distance of a record, while both S&P 500 and Nasdaq futures are broadly flat this morning.
Asian Tech Stocks Rally on AI Optimism: Technology stocks continued to lead gains overnight, with South Korea's KOSPI rising 3.27%. Chipmakers Samsung Electronics and SK Hynix both gained more than 5%, extending the recent rally in semiconductor stocks as optimism around AI investment remains strong. The gains come as investors continue to reassess the outlook for global technology demand and interest rates.
Oil Pulls Back After Six-Day Rally: Brent crude snapped a six-day winning streak yesterday, falling 0.91% to $88.59 a barrel amid ongoing uncertainty surrounding the Middle East and the outlook for demand. Prices are broadly unchanged this morning, up 0.02%. The pullback comes after the extended rally had pushed crude higher on concerns over potential supply disruptions and geopolitical risks.
Gold Retreats as Rate-Hike Concerns Ease: XAU/USD rose 0.87% yesterday to $4,407 an ounce before falling 0.72% this morning to around $4,377. The recent decline reflects shifting expectations for U.S. monetary policy, with markets now pricing a significantly lower probability of a September Fed hike following softer inflation and employment data. Gold nevertheless remains elevated amid persistent geopolitical uncertainty.
Yen Strengthens as BOJ Hike Expectations Build: The Japanese yen strengthened 0.1% to 159.25 per dollar as expectations for a near-term Bank of Japan rate hike increased. Prime Minister Sanae Takaichi's government is reportedly supportive of a rate increase, with September or October seen as the most likely timing for the next move. Meanwhile, the U.S. 10-year Treasury yield fell 1.62 bps to 4.68%.
UK Economy Weathers Iran-War Shock: UK GDP rose 0.4% in the second quarter, suggesting the economy managed to weather the initial shock from the Iran war. Today's UK industrial production data will provide a further indication of the health of the economy.
Economic Calendar
- U.S. PPI
- U.S. Initial Jobless Claims
- UK GDP
- UK Industrial Production
Key Market Moves Today
- S&P 500 Futures: +0.07% (7,775.8)
- U.S. 10-Year Yield: -1.62 bps (4.68%)
- Brent Crude: +0.02% ($88.59)
- Bitcoin: +0.07% ($63,591)
- Spot Gold: -0.72% ($4,377)
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