- Equity markets fall on both sides of the Atlantic.
- Sovereign bonds suffer significant falls after inflation data from the United Kingdom.
- Metals under pressure as the dollar regains strength.
The futures of the main Wall Street indices are falling more than 0.55%, while in Europe the falls average 0.65%. Inflation exceeded 10% in the UK. Traders await US data and minutes. Bonds and metals fall sharply.
optimism fades
UK inflation data played against the mood of the markets. In Europe, the FTSE 100 fell 0.39%, the DAX fell 1.07% and the CAC 40 fell 0.58%. The S&P 500 closed Tuesday 0.19% higher and down 0.73% in the previous. Dow Jones futures fall 0.55% and Nasdaq futures 0.82%.
The Reserve Bank of New Zealand, as expected, raised the interest rate by 50 basis points, sending a more “hawkish” than expected message that pushed the kiwi higher in the market. NZD/USD hit as high as 0.6382, but then reversed direction on a stronger dollar against emerging and commodity-linked currencies and fell below 0.6300.
In the UK, inflation rose to 10.1% in July (higher than the 9.8% expected) from 9.4%, the highest level in four decades. The data adds to the positive employment on Tuesday which contributes to generating expectations of another rise of 50 basis points by the Bank of England. The Pound is trading flat on Wednesday, with GBP/USD around 1.2100 and EUR/GBP at 0.8400.
Wednesday’s trading will continue to be busy as important US data will be released including the retail sales report for July (0.1% increase expected). In the afternoon of the American session, the Federal Reserve will publish the minutes of the last FOMC meeting, when it raised the interest rate by 75 basis points. Clues to the Fed’s next steps will be sought in the minutes.
The dollar he is rising against most of his rivals on Wednesday. The DXY it is up 0.17% and is above 106.60, still far from Tuesday’s peak near 107.00.
UK inflation data served to pull down sovereign bonds. The US 10-year bond yields 2.86% and the 30-year bond yields 3.13%. In Europe, the Italian bond is at its highest since the end of July at 3.28% and the German at 1.07% maximum in weeks. The British 10-year bond is up 6.70% and is at 2.25%, the highest since early July.
The advance in yields is putting downward pressure on gold. XAU/USD is testing $1770, with a bearish bias. The silver trades on weekly lows below $19.90.
The cryptocurrencies They continue with the recovery slowed down. The Bitcoin It’s back below $24,000 and is close to the current week’s low of $23,600. Oil prices are falling for the fourth day in a row, but remain above the low for the week. The barrel of WTI is at $86.45, a break below $86.00 could trigger a new leg down.
in the premarketBeth Bath and Beyond it is up more than 15%, after a 29% gain on Tuesday. target reported a larger-than-expected drop in profit on Wednesday, as the company attempts to unload excess inventories; in the premarket the action falls 3.05%. Results will be reported later. CiscoKrispy Kreme, Love’s and Wolfspeed.
Technical levels
Source: Fx Street
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