Disinflation, rotation and a bruised dollar
July 12 (Reuters) -A look at the day ahead in U.S. and global markets from Mike Dolan
A violent rotation from Big Tech into small cap stocks followed the surprisingly benign June U.S. inflation report, while U.S. borrowing rates and the dollar plunged and Japan's yen stole the currency show.
What's now become almost traditional market volatility on U.S. CPI day didn't disappoint on Thursday.
Although there's been some steadying of the ship early on Friday as major U.S. banks prepare to kick off the second-quarter earnings season in earnest, confirmation of a resumption of disinflation has left its mark.
Seeded by a withering recoil in AI and EV giants Nvidia NVDA.O and Tesla TSLA.O, the Nasdaq .IXIC turned tail from record highs and plunged almost 2% after the CPI report, even as small caps in the Russell 2000 .RUT surged more than 3% to three-month highs on their best day of the year so far.
Less extreme but also dragged down by the heavyweights, the S&P 500 .SPX lost almost 1%, though futures Esc1 have held the line overnight.
At least Tesla, which tumbled 8.4% for its biggest drop since January, had some excuse after a Bloomberg report claimed the firm is delaying the launch of robotaxi by about two months.
But the wild rotation of stock sectors seemed more like a spontaneous reaction to the positive inflation news, where headline prices actually fell during the month for the first time in four years and annual inflation dipped below 3% for the first time in 12 months.
The runes of the report were similarly impressive, with core inflation below forecast at 3.3% - its lowest in three years - and irksome services and shelter components also moderating.
A big drop in weekly jobless claims in the background provided a pleasing mix, despite the confusing stock market volatility. And producer price updates on Friday will hold the picture up to the light again.
Federal Reserve officials were quick to applaud the piece.
St Louis Fed President Alberto Musalem called the June report "encouraging", San Francisco Fed boss Mary Daly talked of "relief" and the Chicago Fed's Austan Goolsbee called it "excellent" news that puts inflation back on track to its 2% target.
The International Monetary Fund said it continues to believe the Fed can start cutting interest rates later this year.
Rate futures agreed, with a first Fed cut now fully priced for September and as much as 60 basis points seen over the remainder of the year. Ten-year Treasury yields US10YT=RR plunged to their lowest in four months, though they popped back above 4.2% early on Friday.
The dollar .DXY, predictably, was a casualty.
And there was almost consternation in the dollar/yen pair, which plunged almost 2% amid some suspicion and various reports the Japanese authorities used the opportunity to intervene to buy yen and maximise the move.
No official confirmation was forthcoming overnight, with the dollar regaining a foothold back above 159 yen, still almost three yen below the recent 38-year high.
The follow-through from all the upheaval in world markets through early Friday has been messy.
Hit by the tech swoon and the yen spike, Japan's Nikkei .N225 skidded 2.5% and other tech-heavy Asia bourses in South Korea .KS11 and Taiwan .TWII fell sharply.
While Hong Kong shares .HSI surged, Chinese mainland stocks .CSI300 were more mixed as the June trade report from China threw up conflicting signals.
While Chinese exports beat forecasts for the month, imports fell again raising more concerns about domestic demand in the world's second-largest economy.
In Europe, the stock reaction was mostly positive on Friday, with only Britain's midcap FTSE250 .FTMC taking a small step back from its best level in more than two years after the CPI report.
But the dollar retreat provided a boon to both the euro EUR= and sterling GBP=, with the post-election buzz in the latter sending it to its highest in a year.
Elsewhere, attention remained on politics. Pressure on U.S. President Joe Biden to step aside from November's White House race continued after a series of verbal gaffes during his latest appearance at the NATO summit in Washington.
Key developments that should provide more direction to U.S. markets later on Friday:
* US June producer price index, July University of Michigan consumer survey
* US corporate earnings: JPMorgan, Citi, Wells Fargo, Bank of New York Mellon, Fastenal
US inflation and interest rates https://reut.rs/4bUy6h3
Inflation pleasantly surprises https://tmsnrt.rs/3S1KXGZ
Intervention alarm bell rings as yen surges https://reut.rs/3zMgxC6
China's exports rise but imports fall in June https://reut.rs/3S5GYJl
U.S. banks kick off earnings season https://reut.rs/4bxuwZY
By Mike Dolan, editing by Sharon Singleton mike.dolan@thomsonreuters.com
Ativos relacionados
Últimas notícias
Isenção de Responsabilidade: As entidades do XM Group proporcionam serviço de apenas-execução e acesso à nossa plataforma online de negociação, permitindo a visualização e/ou uso do conteúdo disponível no website ou através deste, o que não se destina a alterar ou a expandir o supracitado. Tal acesso e uso estão sempre sujeitos a: (i) Termos e Condições; (ii) Avisos de Risco; e (iii) Termos de Responsabilidade. Este, é desta forma, fornecido como informação generalizada. Particularmente, por favor esteja ciente que os conteúdos da nossa plataforma online de negociação não constituem solicitação ou oferta para iniciar qualquer transação nos mercados financeiros. Negociar em qualquer mercado financeiro envolve um nível de risco significativo de perda do capital.
Todo o material publicado na nossa plataforma de negociação online tem apenas objetivos educacionais/informativos e não contém — e não deve ser considerado conter — conselhos e recomendações financeiras, de negociação ou fiscalidade de investimentos, registo de preços de negociação, oferta e solicitação de transação em qualquer instrumento financeiro ou promoção financeira não solicitada direcionadas a si.
Qual conteúdo obtido por uma terceira parte, assim como o conteúdo preparado pela XM, tais como, opiniões, pesquisa, análises, preços, outra informação ou links para websites de terceiras partes contidos neste website são prestados "no estado em que se encontram", como um comentário de mercado generalizado e não constitui conselho de investimento. Na medida em que qualquer conteúdo é construído como pesquisa de investimento, deve considerar e aceitar que este não tem como objetivo e nem foi preparado de acordo com os requisitos legais concebidos para promover a independência da pesquisa de investimento, desta forma, deve ser considerado material de marketing sob as leis e regulações relevantes. Por favor, certifique-se que leu e compreendeu a nossa Notificação sobre Pesquisa de Investimento não-independente e o Aviso de Risco, relativos à informação supracitada, os quais podem ser acedidos aqui.