Stocks drop, dollar strengthens as markets watch US inflation data

Stocks drop, dollar strengthens as markets watch US inflation data
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  • Focus on US inflation for signs of slowdown in Fed hikes
  • Dollar firm feeds crypto spread fears
  • Mainland China and Hong Kong stocks battered by COVID case rise
  • European markets are stable

SYDNEY/LONDON, Nov 10 (Reuters) – Stocks fell slightly and the dollar strengthened ahead of inflation data on Thursday that will impact the US Federal Reserve’s interest rate plans as the potential collapse of a major digital asset exchange shakes crypto investors.

MSCI world stock index (.MIWD000000PUS) Dropped 0.36%, driven by losses in Asia (.MIAPJ0000PUS)however, this week’s two-month high remains in sight.

British (.FTSE)French (.FCHI) and German (.GDAXI) US S&P500 futures rose 0.4%, while investors were cautious ahead of the data.

High inflation in the sky has caused the Fed to raise rates aggressively this year; It’s a process that boosts the dollar and causes a sharp sell-off of U.S. Treasuries and stocks around the world.

Hopes that the Fed may be nearing the end of this period have helped stocks rebound in recent weeks.

The release of US CPI data at 1330 GMT is the main event of the day for markets as investors try to position themselves according to when and at what level they think US interest rates will peak.

According to the Reuters poll, the report is expected to show a slowdown in both monthly and annual core numbers to 0.5% and 6.5%, respectively, for October.

“I think the story here is that there are a lot of indicators that inflation peaked and rolled, like supply chains, used cars, maybe wages, but these weren’t shown in the CPI report, so the question is, is today the day when all these indicators finally come out?” Samy Chaar, chief economist at Lombard Odier, said:

“Everyone is focused on this and how it will affect not only the December Fed meeting, but also the pricing of the highest policy rate.”

He said that if the CPI comes in higher than expected, especially in its key components, then pricing will rise, possibly sending the dollar higher, while a lower-than-expected pressure could cause the U.S. currency to reverse some gains.

According to CME’s Fedwatch tool, markets are currently pricing in a 54% chance for a 50 basis point increase at the Fed’s December meeting, and there is still a good chance for a 75 basis point gain. Prospects for future meetings are divided.

The US dollar strengthened on Thursday, with the euro falling 0.6% to $0.9947 while the yen held steady at 146.45 per dollar. .

The dollar hit a 20-year high against the euro, which dropped to a 32-year high of 151.94 yen in October and the European common currency to $0.9528 in September.

Yields on 10-year U.S. Treasuries were down on the day to 4.1%, while yields on European government bonds were little changed.

Upcoming CPI data meant that markets were largely looking at the outcome of the US midterm elections. Republicans were getting close to gaining a majority in the US House of Representatives. Senate control hung on the scales.


Another factor for markets is that China’s southern metropolis, Guangzhou, is again grappling with a COVID-19 surge. reporting thousands of cases. china chips (.CSI300) Lost 0.7% and Hong Kong benchmark (.HSI) It fell 1.7%.

Apple Inc. (AAPL.O) supplier and iPhone assembler Foxconn (2317.TW) said on Thursday expected flat The company posted revenue in the fourth quarter as it grappled with COVID curbs at a large factory in China’s Zhengzhou industrial centre.

In the crypto world, bitcoin rose 5% to $16,666 on Thursday, its lowest level since the end of 2020 after falling sharply to $15.632 for two straight sessions.

Binance, the world’s largest crypto exchange, said late Wednesday: He had decided that he was not to acquire smaller competitor FTX, which is grappling with a severe liquidity crunch and warns it is facing bankruptcy without more capital.

In commodities, oil prices slumped after falling around 3% in the previous session on fears over Chinese demand and rising US crude inventories.

US crude futures fell 0.7% to $85.23 a barrel, while Brent crude futures fell 0.33% to $92.28.

Gold spot price remained stable at $1,707.3 per ounce.

reporting by Stella Qiu in Sydney and Alun John in London; Editing Emelia Sithole-Matarise, Kirsten Donovan

Our standards: Thomson Reuters Trust Principles.

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