- Markets continue to digest the US CPI data, today it is the turn of wholesale inflation.
- Futures in red with falls on average greater than 1%.
- European stocks also fall sharply.
- Banks present second quarter results.
European markets and Wall Street futures are falling significantly. The economic outlook of rising inflation and weakening growth continue to weigh on investor sentiment. The dollar is firm, about to mark new highs in decades against the euro, after doing so against the yen.
Follow the pessimism
In Europe, the FTSE 100 fell 0.88%, while the DAX lost 1.10% and the FTSE MIB loses 2.53%. As for Wall Street, After falling 0.45% on Wednesday, S&P 500 futures fell 1.3%; those of the Dow Jones lost 1.39% and those of the Nasdaq 0.95%.
The declines follow a day of high volatility, which was triggered by the US Consumer Price Index data that climbed to the highest since 1981. This adds pressure to the Federal Reserveto continue acting aggressively.
In the treasury bond market, the inflation data pushed bonds lower, but then they rebounded strongly. The hikes by the Fed in the short term collide with expectations of low economic growth (or recession), which would lead to rate cuts by 2023. The wholesale inflation data will be published on Thursday which can generate noise (an increase of 0.8% per month is expected in June). In addition, the data on unemployment subsidy requests will come out. At the beginning of Friday, China’s growth data for the second quarter will be released.
The European Commission cut growth forecasts for the region and raised inflation forecasts. In Italy, political uncertainty is growing after the ruling party’s announcement that it will abstain during the vote of confidence, which could remove Mario Draghi from the unity government. Italian bonds are falling significantly, with the 10-year benchmark at 3.46%, the highest since the beginning of the month.
The dollar remains strong in the market and reached new highs in decades against the yen and aims to do the same against the euro. The advance of the greenback is widespread. The Prayed and the silver are still under pressure. XAU/USD gave back all of Wednesday’s bounce and is nearing $1700 while XAG/USD hit new two-year lows below $18.80. The negative climate in the global markets maintains the Bitcoin struggling to hold onto $20,000.
The prices of Petroleum they remain downhill in the face of worsening growth expectations and a stronger dollar. The barrel of WTI hit new lows since February.
In the premarket the shares of netfix fall 1.14% after the election of microsoft (down 1.08%) as a partner to launch a low-cost advertising program. JPMorgan Chase It presented results on Thursday showing a drop in earnings ($2.76 per share against $3.78 a year ago) and higher revenues ($30.720 million against $30,480). The bank’s shares fall 2.60% in the premarket. Corporate earnings will continue on Thursday with more banks including First Republic Bank and Morgan Stanley.
Technical levels
Source: Fx Street
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