- Focus on US inflation for signs of slowing Fed hikes
- Dollar business, crypto fuels spillover fears
- Mainland China and Hong Kong stocks battered by spike in COVID cases
- Stable European markets
SYDNEY/LONDON, Nov 10 (Reuters) – Stocks fell slightly and the dollar strengthened on Thursday, ahead of U.S. inflation data that will influence the Federal Reserve’s pricing plans, while the likely collapse of a major digital asset exchange has rattled crypto investors.
The MSCI World Stock Index (.MIWD00000PUS) fell 0.36%, driven by losses in Asia (.MIAPJ0000PUS)but remained within sight of this week’s two-month high.
British (.FTSE)French (.fchi) and German (.GDAXI) equity benchmarks traded sideways as traders were cautious ahead of the data, while US futures on the S&P500 gained 0.4%.
Skyrocketing inflation prompted the Fed to hike rates aggressively this year, a process that boosted the dollar and caused a sharp sell-off in US Treasuries and stocks around the world.
Hopes that the Fed is nearing the end of this process, however, have helped stocks rally in recent weeks.
The release of US CPI data, scheduled for 13:30 GMT, is the main event of the day for markets as investors try to position themselves for when and where they think US interest rates will go. will peak.
The report is expected to show a slowdown in monthly and annual core figures for October to 0.5% and 6.5%, respectively, according to a Reuters poll.
“I think the story here is that there are a lot of indications of inflation peaking and overshooting – like supply chains, used cars, maybe wages – but they simply haven’t been shown in the CPI report, so the question is, is today the day all of these indicators will finally show up?” said Samy Chaar, chief economist at Lombard Odier.
“Everyone is focused on that and how that will affect prices not just for the December Fed meeting, but for peak key rate prices as well.”
He said if the CPI was higher than expected, especially its core components, then prices would rise and likely send the dollar higher, while a weaker-than-expected print could cause the US currency to return some earnings.
Markets are currently pricing a 54% chance of a 50 basis point hike at the December Fed meeting, according to CME’s Fedwatch tool, with still a good chance of a 75 basis point hike. . Expectations for future meetings are mixed.
The US dollar strengthened on Thursday, with the euro falling 0.6% to $0.9947 while the yen was flat at 146.45 to the dollar. .
The greenback hit a 32-year high at 151.94 yen in October and a 20-year high against the euro in September when the common European currency fell to $0.9528.
The benchmark 10-year US Treasury yield was 4.1%, slightly lower on the day, while European government bond yields were little changed.
The impending CPI data meant that markets widely scrutinized the US midterm election results. Republicans were closing in on a majority in the U.S. House of Representatives while Senate control hanging in the balance.
THE EVOLUTION OF COVID IN CHINA
Another factor for markets is that China is once again grappling with a surge of COVID-19, with the southern metropolis of Guangzhou reporting thousands of cases. chinese blue chips (.CSI300) lost 0.7% and the Hong Kong benchmark (.HSI) fell 1.7%.
Apple Inc. (AAPL.O) Foxconn iPhone supplier and assembler (2317.TW) said Thursday expected flat revenue in the fourth quarter as the company grapples with COVID curbs at a large factory in China’s industrial hub of Zhengzhou.
In the crypto world, bitcoin rose 5% to $16,666 on Thursday, stabilizing after plunging sharply for two straight sessions to $15,632, its lowest level since late 2020.
Binance, the world’s largest crypto exchange, said Wednesday evening that he decided not to to acquire smaller rival FTX, which has been struggling with a severe cash crunch and has warned it faces bankruptcy without more capital.
In commodities, oil prices fell slightly, after falling about 3% in the previous session on fears over demand from China and rising US crude inventories.
U.S. crude oil futures fell 0.7% to $85.23 a barrel, while Brent crude oil futures fell 0.33% to $92.28.
Gold held steady with the spot price at $1,707.3 per ounce.
Reporting by Stella Qiu in Sydney and Alun John in London; Editing by Emelia Sithole-Matarise, Kirsten Donovan
Our standards: The Thomson Reuters Trust Principles.