Global shares pull back as concern over US growth, Asia tech rout weigh on investor confidence

Traders work on the floor of the New York Stock Exchange
Traders work on the floor of the New York Stock Exchange

  • Global shares fell on Friday after US GDP and unemployment data came in weaker than expected.
  • Investor concern about Chinese regulatory crackdowns, especially in the tech sector, continued.
  • Higher-than-expected inflation readings undermined European markets, despite strong EU growth.
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Global shares fell on Friday after US GDP and unemployment data the previous day reflected slower economic growth than expected, while a looming threat of a Chinese regulatory crackdown on tech stocks continued to weigh on investor confidence.

US futures fell, with Dow Jones futures 0.34% down, S&P 500 futures down 0.7% and Nasdaq futures down by 1.16% at 5:43 am E.T.. The benchmark indices neared record highs on Thursday, leaving the S&P 500 less than 0.1% off an all-time peak.

Weaker-than-expected US economic growth in the second quarter and a slower fall in unemployment that many economist had forecast soured investor optimism over the outlook for recovery, analysts said.

Meanwhile, Amazon’s quarterly earnings fell short of expectations, as the e-commerce giant missed quarterly sales estimates for the first time since 2018, while sales and profit forecasts were below expectations, further worrying investors about the economic outlook. The company shares fell as much as 7% in pre-market trading.

Yields on 10-year Treasury notes were last at 1.251%, down by 1.8 basis points ahead of inflation and personal spending data.

Rising Covid-19 cases and Chinese regulatory pressure on tech stocks also weighed on markets. Earlier in the week, Chinese officials had said they would be more considerate of volatility when making regulatory decisions, but the calming words had little lasting impact.

“The fact the tech-heavy Nasdaq futures have led US index futures lower suggests that they, and China, Japan, and South Korean markets are suffering a dose of pre-weekend China regulatory risk jitters,” Jeffrey Halley, senior market analyst at OANDA, said.

Asian markets closed lower on Friday, with Tokyo’s Nikkei 225 falling 1.8%, the Shanghai Composite declining by 0.42% and Hong Kong’s Hang Seng index dropping by 1.28% as a surge in delta variant cases and regulatory concerns dominated sentiment throughout the region.

In Europe, London’s FTSE 100 was last down 0.93%, the EuroStoxx 50 had declined by 0.69% and Frankfurt’s DAX was last down 0.99%. A measure of eurozone inflation rose more than anticipated in July, coming in at 2.2% compared to an expected 2%. This was its highest since October 2018.

The impact of this could not be set off by a strong read of eurozone GDP, which rose 2% quarter-on-quarter in the the three months to June, breaking two straight quarters of contraction, despite initial difficulties with the vaccination rollout, rising delta variant cases and continuing supply-chain issues.

“Looking ahead at 3Q, we would note that the delta variant is causing some delays in the easing of restrictions and that supply chain problems continue to weigh on manufacturing production. Still, we expect growth to come in very strong – currently pencilled in at 2% quarter-on-quarter – as domestic and foreign demand remain very robust.” ING analysts said.

Oil prices fell on Friday, reversing some of the previous day’s losses. Slower economic growth and recovery could indicate lower demand for a longer than expected time. Brent crude was last down 0.31% at $74.87 per barrel, while WTI crude was last at $73.36, down 0.35%.

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Legendary investor Bill Miller thinks the stock market looks fairly valued – and bitcoin’s use as a store of value is an open question

Bill Miller
  • Bill Miller said the stock market looks fairly valued, and investors are mostly optimistic.
  • Fund managers should be able to find “plenty of names to fill our portfolios,” he said.
  • Bitcoin’s use as a store of value is an open question driving strong debate, the billionaire said.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Despite predictions for a market crash from other top investors, the stock market looks fairly valued, famed stock picker Bill Miller said in his latest letter to fund clients.

The star investor, whose flagship fund beat the market for 15 years straight, but tumbled 55% in 2008, said he found it curious that investors like Michael Burry, Jeremy Grantham, Leon Cooperman, and Stanley Druckenmiller are predicting an epic market crash because “we had one only 15 months ago.”

Economic turmoil and anxiety over the effects of the COVID-19 crisis saw the market decline the most in history during March 2020 before it kicked off a remarkable recovery, he said.

“The market looks broadly fairly valued to me, with most stocks priced to provide a market rate of return plus or minus a few percent,” he added. “There does appear to be considerable optimism among individual investors about their expected returns from stocks.”

For Miller, factors including a 7% growth estimate, higher expectations of company earnings, and a rise in the net worth of US households are all adding to the recovery story. The only point of contention is the outlook for inflation.

He said that while prices are broadly rising across sectors at the fastest pace in decades, the pandemic-driven boom in certain commodities like lumber is cooling off.

He also thinks fund managers should be able to “find plenty of names to fill our portfolios and so remain fully invested.”

The billionaire, whose bitcoin holdings are worth more than his Amazon stock, also gave his take on the outlook for the cryptocurrency, which is currently holding between $32,000 and $36,000 per coin.

“Bitcoin was born out of the 2008 crisis and was designed to be free of government control and manipulation, to be the ultimate in an inflation proof asset,” he said. “It is an open question if it will be an enduring store of value, with many strong opinions on both sides.”

Miller began buying bitcoin when it cost $200-300. It was last trading at $33,237 per coin as of 4:00 a.m ET on Tuesday, a decline of about 41% in the past three months, but still up nearly 260% in a year.

Read More: These 5 stocks are ripe for a short squeeze after surging in popularity this past month, according to Fintel. 2 even have the meme-friendly appeal of AMC and GameStop.

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European stocks edge lower as investors eye the spread of the Delta variant, while China’s tech sector weighs regulatory scrutiny

traders nyse

European markets opened mostly lower on Monday as the spread of the Delta variant had a dampening effect on some of the reopening bullishness, while US markets were closed, meaning trading volumes would likely be thinner.

London’s FTSE 100 fell 0.02%, the Euro Stoxx 50 fell 0.4%, and Frankfurt’s DAX fell 0.5%.

US markets were closed for the Independence Day holiday, but futures pointed to a 0.1% dip for Tuesday’s open.

UK Prime Minister Boris Johnson was set to announce later on Monday a further relaxation of coronavirus restrictions, involving voluntary use of face masks in public, despite a spike in new infections. The country reported more than 170,000 cases in the past seven days, a 67% jump from last week.

The final stage of the four-step plan to end lockdown, scheduled to come into effect on July 19, will be “an enormous test case as to whether heavily vaccinated countries can live with the virus,” Deutsche Bank strategist Jim Reid said.

French Health Minister Olivier Véran warned in a tweet on Sunday that based on the UK’s current situation, France too could be hit by a wave of the contagious Delta-variant infections by the end of July.

Covid-sensitive assets struggled on news of the spread, with the STOXX 600 Travel & Leisure index down 0.13%, extending the previous week’s losses.

British supermarket Morrisons gained 11% after US investment firm Apollo said it was considering making a rival offer to buy the chain. Apollo’s bid could trump a £6.3 billion ($8.7 billion) offer, to which the chain has already agreed to, from Softbank-backed Fortress, according to Bloomberg.

Asian markets traded mostly lower after investors digested China’s expanding crackdown on technology platforms that targets more US-listed companies. Regulators ordered the removal of ride-hailing firm Didi Chuxing from app stores, days after its successful New York IPO, on the grounds that it had been collecting and using personal user data.

The Shanghai Composite rose 0.4%, Tokyo’s Nikkei lost 0.6%, and Hong Kong’s Hang Seng declined 0.3%.

Oil prices remained largely unchanged ahead of the OPEC+ meeting that is set to resume on Monday after disagreements over production cuts last week. The United Arab Emirates is against extending the deal to increase production until the end of 2022 and is demanding better terms for itself, according to Deutsche Bank analysts.

Brent crude rose 0.03% to $76.19 per barrel. Gold rose 0.5% to $1,792 an ounce.

Read More: RBC: Buy these 19 stocks that should outperform in the 3rd quarter on the way to upside of at least 20% over the next year

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US stocks hover near record highs at the start of the 2nd half of 2021, but the Delta variant knocks Asian equities and boosts the dollar

A stock trader claps at the end of trade at the New York Stock Exchange
  • US stocks traded near record-highs on Thursday, while Asian markets dipped on worries over the Delta variant.
  • But according to JPMorgan, the variant’s spread doesn’t pose a risk to the stock market.
  • The S&P 500 recorded one of its strongest first-half performances in 23 years this year.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

US stocks hovered near record-highs on the arrival of the second half of the year on Thursday, but investor sentiment that has been dampened by the spread of the Delta variant put Asian markets on a weaker footing.

Futures on the Dow Jones, and Nasdaq rose between 0.2% and 0.4%, suggesting a higher start to trading later in the day. The S&P 500 rose 0.3%. The index is up 14% year-to-date, the second-biggest gain for the first half of the year since 1998.

Data suggests the highly infectious variant may be the most common strain in the US, leading many to question how well the economy will continue to fare. But the spread doesn’t pose a direct risk to equities, and could instead drive a rebound in value stocks and bond yields, JPMorgan said in a note on Wednesday.

US private payrolls data released by the ADP beat expectations on Thursday, rising by 692,000 in June. Economists polled by Bloomberg held a median estimate of a 600,000 payroll gain. But traders think the government’s own jobs report on Friday could jostle markets from a slumber, according to Reuters.

The dollar index advanced ahead of US labor data, after having gained 2.6% in June – its biggest monthly rise since March 2020.

In Europe, the UK recorded more than 26,000 new COVID-19 cases on Wednesday, the biggest daily rise since late January. However, one bright spot so far is hospitalizations and deaths are far more subdued than in the spike in infections at the start of the year, Deutsche Bank analysts said.

Inflation in the UK may be the defining economic theme of the post COVID-19 recovery with important consequences for both monetary and fiscal policy, Sanjay Raja, senior economist at Deutsche Bank, said on Thursday.

London’s FTSE 100 rose 1.2%, the Euro Stoxx 50 rose 1.1%, and Frankfurt’s DAX rose 1.1%.

Asian equities all traded lower on Thursday, while markets in Hong Kong were closed for a holiday. President Xi Jinping marked the 100th anniversary of the Chinese Communist Party’s founding in a speech Thursday, noting the country’s quest to gain control of Taiwan was a “historic mission” and an unshakable party commitment. His address did little to calm geopolitical nerves as the Shanghai Composite fell 0.07% and Tokyo’s Nikkei fell 0.2%.

Read More: The founder and CIO of a $2.2 billion money manager that invested early in Didi is set to reap ‘one of the largest profits’ it’s made as the Chinese ride-hailing giant goes public. Christopher Zook explains why he bought in – and shares 3 other opportunities on his radar.

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Global stocks edge higher as investors focus on post-pandemic era growth, while bitcoin continues to slide

NYSE Trader smile happy

Global stocks rose slightly on Tuesday even after a number of key Federal Reserve speakers reminded market participants the central bank would continue to support the economy, leaving investors to focus on the prospects for post-pandemic growth.

Futures on the Dow Jones and S&P 500 dipped slightly, while those on the Nasdaq fell 0.3%, suggesting a lower start to trading later in the day.

After a more hawkish Fed outlook last week, New York Fed President John Williams offered a more relaxed view on Monday by saying he expects the recent spike in inflation to be temporary.

St. Louis Fed President Bullard said the Fed ought to set up its taper so it could be adjusted if necessary, raising the prospect that the pace could change depending on the strength of the economic recovery and inflation outcomes, Deutsche Bank analysts said.

But Williams, who expects inflation to return to the Fed’s target of 2% next year, said he still sees tapering as “quite a ways off,” suggesting it was too soon to change current central bank policy. According to Deutsche Bank, a dispersion of views from the Fed committee is more healthy compared to a year of its coordinated messaging.

UBS said the time for investors to look ahead and position their portfolios for key trends that will shape the second half of 2021 and beyond is now, not at a later date.

“If we look around today, we see economies reopening, inflation spiking, and equity volatility at its lowest level since before the pandemic,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said. “But if we look forward, we see something different.”

Fed Chair Jerome Powell said late Monday the Fed would do everything it can to support the economy “for as long as it takes to complete the recovery.” He remained optimistic, saying the job market should pick up in coming months as vaccinations rise.

“Given that financial markets were panicking over the end of the global reflation trade in the days before, it is impossible to guess whether the Powell comments are merely a temporary pause to the global reflation trade unwind or mark the end to the correction,” Jeffrey Halley, a senior market analyst at OANDA, said.

The broad cryptocurrency sell-off continued on Tuesday after China summoned leaders of the country’s largest banks to reiterate a ban on crypto services. Bitcoin fell 2% to $32,355, ether fell 4% to $1,920, and dogecoin fell 23% to 19 cents.

Elsewhere in Europe, Prime Minister Boris Johnson said it is “looking good” for July 19 to mark the lifting of coronavirus restrictions. But he didn’t rule out the chance of further lockdowns in the winter.

London’s FTSE 100 rose 0.2%, while the Euro Stoxx 50 and Frankfurt’s DAX fell 0.2%.

Asian markets mostly rose on the prospect of global recovery trade, following their retreat a day earlier, after Powell’s dovish comments.

China’s Shanghai Composite rose 0.8%, Tokyo’s Nikkei rose 3%, and Hong Kong’s Hang Seng fell 0.7%.

Read More: 26-year-old Ricky Gutierrez is one of YouTube’s biggest investing influencers, with nearly 1 million subscribers. He told us his top 3 strategies for trading blue-chip stocks like Twitter and Tesla.

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Global stocks wobble as investors focus on post-pandemic era growth, while bitcoin continues to slide

NYSE Trader smile happy

Global stocks wavered on Tuesday even after a number of key Federal Reserve speakers reminded market participants the central bank would continue to support the economy, leaving investors to focus on the prospects for post-pandemic growth.

Futures on the Dow Jones and S&P 500 dipped slightly, while those on the Nasdaq fell 0.3%, suggesting a lower start to trading later in the day.

After a more hawkish Fed outlook last week, New York Fed President John Williams offered a more relaxed view on Monday by saying he expects the recent spike in inflation to be temporary.

St. Louis Fed President Bullard said the Fed ought to set up its taper so it could be adjusted if necessary, raising the prospect that the pace could change depending on the strength of the economic recovery and inflation outcomes, Deutsche Bank analysts said.

But Williams, who expects inflation to return to the Fed’s target of 2% next year, said he still sees tapering as “quite a ways off,” suggesting it was too soon to change current central bank policy. According to Deutsche Bank, a dispersion of views from the Fed committee is more healthy compared to a year of its coordinated messaging.

UBS said the time for investors to look ahead and position their portfolios for key trends that will shape the second half of 2021 and beyond is now, not at a later date.

“If we look around today, we see economies reopening, inflation spiking, and equity volatility at its lowest level since before the pandemic,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said. “But if we look forward, we see something different.”

Fed Chair Jerome Powell said late Monday the Fed would do everything it can to support the economy “for as long as it takes to complete the recovery.” He remained optimistic, saying the job market should pick up in coming months as vaccinations rise.

“Given that financial markets were panicking over the end of the global reflation trade in the days before, it is impossible to guess whether the Powell comments are merely a temporary pause to the global reflation trade unwind or mark the end to the correction,” Jeffrey Halley, a senior market analyst at OANDA, said.

The broad cryptocurrency sell-off continued on Tuesday after China summoned leaders of the country’s largest banks to reiterate a ban on crypto services. Bitcoin fell 2% to $32,355, ether fell 4% to $1,920, and dogecoin fell 23% to 19 cents.

Elsewhere in Europe, Prime Minister Boris Johnson said it is “looking good” for July 19 to mark the lifting of coronavirus restrictions. But he didn’t rule out the chance of further lockdowns in the winter.

London’s FTSE 100 rose 0.2%, while the Euro Stoxx 50 and Frankfurt’s DAX fell 0.2%.

Asian markets mostly rose on the prospect of global recovery trade, following their retreat a day earlier, after Powell’s dovish comments.

China’s Shanghai Composite rose 0.8%, Tokyo’s Nikkei rose 3%, and Hong Kong’s Hang Seng fell 0.7%.

Read More: 26-year-old Ricky Gutierrez is one of YouTube’s biggest investing influencers, with nearly 1 million subscribers. He told us his top 3 strategies for trading blue-chip stocks like Twitter and Tesla.

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US stocks stabilize after Fed’s Bullard jolted markets last week by signalling a rate rise as early as 2022

2021 03 05T123827Z_3_LYNXMPEH240MQ_RTROPTP_4_GLOBAL MARKETS.JPG
  • US futures recovered some losses after Federal Reserve official James Bullard said rates could rise by 2022.
  • He said the Fed’s hawkish tilt is only natural given inflation is stronger than anticipated.
  • Bullard predicted inflation will run at 3% in 2021 and 2.5% in 2022, before trending back to the Fed’s target of 2%.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

US and European stocks recovered some losses on Monday after Federal Reserve official James Bullard indicated the central bank may need to raise rates in late 2022, as he said inflationary pressure is expected to pick up faster than previously anticipated.

Futures on the Dow Jones, S&P 500, and Nasdaq rose 0.2%, suggesting a slightly higher start to trading later in the day.

In an interview with CNBC on Friday, Bullard predicted inflation would run at 3% this year and 2.5% in 2022, before trending back to the Fed’s 2% target. He isn’t a voting member on the Federal Open Market Committee this year, but will get a vote next year.

Bullard’s comments initially sparked a run for the exit door for equity markets and commodities while the dollar powered higher, Jeffrey Halley, a senior market analyst at OANDA, said. The Nasdaq still held up relatively well, as investors cycled out of growth stocks on the S&P 500 and Dow Jones and into the perceived safety of big-tech, he said.

However, UBS expects inflation to fall from current levels and believes persistent inflation above 3% is unlikely.

“While we don’t think investors should be unduly concerned about inflation in the near term, we do recommend they take steps to protect their portfolios against potentially higher inflation over the long term,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said.Some assets perform better than others in a higher-inflation environment.”

Inflation, or the general rate at which prices climb, has become one of investors’ greatest concerns when considering the ability of the US economy to fully bounce back from the coronavirus-led crash.

Read More: Credit Suisse says to buy these 18 tech stocks now while they’re cheap and ahead of their years of powerful profit growth

The St. Louis Fed President said due to the pickup in inflation expectations, it’s only natural that the central bank would have adjusted its stance.

Bond prices reacted strongly to the Fed’s hawkish pivot last week, with 10-year yields initially increasing over 8 basis points on Wednesday. But by the end of the week, the yield curve flattened significantly, with longer-term yields falling sharply as investors grew confident that the Fed would rein in inflation, or that there may be a policy error in the offing, according to Deutsche Bank analysts.

Elsewhere in Europe, stocks recovered losses in early trading. Investors will be watching for the Bank of England’s key monetary policy decision on Thursday. Deutsche Bank economists expect the benchmark rate to remain at 0.1%, with no change to the size of the central bank’s asset-purchase program, currently £895 billion ($1.2 billion).

UK mid-cap grocer Morrison’s surged 30% after getting a takeover bid from a US private equity firm Clayton, Dubilier & Rice, although the offer was rejected. Shares in grocery-chains Sainsbury’s rose 4.5% and Tesco rose around 2%.

Overall, London’s FTSE 100 and the Euro Stoxx 50 fell 0.2%, while Frankfurt’s DAX was about flat.

Asian equities followed Wall Street’s initial sell-off after Bullard’s comments by trading lower than other regions.

Japan’s Nikkei fell 3.2%, Hong Kong’s Hang Seng fell 0.9%, while China’s Shanghai Composite was about flat.

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Global shares head for worst week in a month, while the dollar trades near 2-month highs as the Fed’s shift spooks investors

Wall Street decorated with American flags.
A more-hawkish stance by the Federal Reserve has forced equity indexes off recent record highs and boosted the dollar.

  • Global shares eased while the dollar rose as investors mulled over a more hawkish US rate outlook.
  • Gold headed for its biggest slide since February, pressured by rising bond yields and a firm dollar.
  • The dollar traded near its highest in two months, buoyed by a rise in Treasury yields.
  • See more stories on Insider’s business page.

Global shares on Friday headed for their steepest weekly drop in a month, while the dollar neared two-month highs, as investors began to prepare for an end to the Federal Reserve’s multitrillion-dollar economic-support program.

The Fed met this week to discuss monetary policy and, in light of the resilience of the recovery in the US economy and the pickup in consumer inflation, indicated it might raise interest rates by the end of 2023, sooner than it originally expected.

This more-hawkish stance has forced equity indexes off recent record highs, boosted the dollar, and forced government bond yields up, as chances grow for the central bank to taper the vast asset-purchase program it put in place last year to keep borrowing rates low and protect the economy.

Futures on the S&P 500 and the Dow Jones Industrial Average were flat Friday, while those on the Nasdaq 100 rose 0.2%, suggesting tech stocks might get a lift when trading starts later in the day.

The MSCI All-World index of global shares was down 0.4% on the day, heading for a 0.64% decline this week, the largest in percentage terms in a month.

“Investors have been digesting the latest statements from the US central bank, which surprised markets with a far more hawkish stance than expected,” the AXI strategist Milan Cutkovic said.

“While this hasn’t led to a reversal in stock markets, it could limit further gains in the near-term as taper talks intensify,” he said.

In Europe, the STOXX 600 index was last down 0.1%, echoing the modest weakness across the Asian market, where the Shanghai Composite closed flat and Tokyo’s Nikkei lost 0.2%.

The dollar hovered near its highest in about two months, buoyed by an influx of capital from investors who have ditched assets that tend not to perform well when US rates rise, such as emerging-market currencies and some commodities.

“The world’s reserve currency is heading for its best week in nearly nine months after the surprise change in tone from the Federal Reserve on Wednesday continues to rattle markets and fundamental positioning,” Lukman Otunuga at FXTM said.

“A market accustomed to liquidity on tap from a ‘patient’ Fed has had to face the reality that a tightening is coming far sooner than it previously thought,” he said.

Yields on the five-year US Treasury note, which move inversely to prices, were down 2 basis points on the day, at about 0.858%.

In cryptocurrencies, bitcoin was down 3.7% at about $37,840, while ether was down 4% at about $2,340, in line with the sell-off across other risk assets.

The gold price was heading for its largest weekly loss since early February, on track for a drop of 4%, thanks in part to the strength of the dollar, which makes bullion less appealing for non-US investors to hold.

“The most important driving force behind the price slide is the massive appreciation of the US dollar, which has gained more than 2 cents since the Fed’s meeting on Wednesday,” the Commerzbank analyst Carsten Fritsch wrote in a research note.

Gold was last up about 1% at $1,792 an ounce, having recovered some of Thursday’s 3% decline, which was the biggest one-day drop since January.

Other commodities also declined broadly, having been swept lower by the same dollar-related selling as gold. Lumber was set for a weekly drop of 15%, while copper was on track for a decline of 7.5% and palladium, which is used in autocatalysts for gasoline-powered vehicles, was heading for a fall of 7% on the week.

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Tech stock futures slip as investors brace for a jump in inflation, while bitcoin rebounds after sharp drop

Trader
Investors and traders were bracing for key inflation data on Thursday.

Tech stock futures slipped on Wall Street on Thursday as investors around the world awaited key US inflation data, which is expected to show a sharp rise in prices in May.

Meanwhile, bitcoin rallied after its recent tumble as investors were drawn in by the lower price. The dollar and Treasury yields moved slightly higher.

Futures were mostly flat, with the tech-heavy Nasdaq 100 index down 0.2%. S&P 500 futures down 0.05% and Dow Jones futures up 0.03%.

In Europe, the Stoxx 600 was down 0.08% as the European Central Bank prepared to set monetary policy.

In Asia overnight, China’s CSI 300 rose 0.67% while Japan’s Nikkei 225 climbed 0.34%.

Markets have been subdued for much of the last two weeks, with investors happy to see stocks tick slowly higher as economies reopen. The S&P 500 and the Stoxx 600 have been trading around record highs.

Yet the US consumer price index inflation data, due to be released at 8.30 a.m. ET on Thursday, has the potential to shake markets.

Economists expect CPI to have jumped 4.7% year on year in May from 4.2% in April, which was the highest reading since 2008.

Some investors worry that rising prices could force the Federal Reserve to reduce its support for the economy. Inflation also erodes the real returns on financial assets. Tech stocks, which have soared in an environment of low inflation and low interest rates, are particularly vulnerable.

Markets should be able to digest a consensus rise in inflation, but will start to worry if the Fed begins to shift its position, Alan Ruskin, chief international strategist at Deutsche Bank, said.

“Next week, the [Fed] is going to have a tougher time maintaining exactly the same ultra-dovish posture as the last few meetings, given the inflation overshoot from prior expectations,” he said.

However, Paul Donovan, chief economist at UBS Wealth Management, said he agreed with the Fed’s view that inflation should be transitory.

“The effect of very low prices this time last year and the uncoordinated reopening of the global economy are contributing to reported price increases in specific product markets, but should not last,” he said.

Elsewhere, bitcoin rallied on Thursday as investors moved in to buy the recent dip, after El Salvador’s move to make the crypto asset legal tender restored some positivity to the market.

The cryptocurrency was up 1.4% to $36,900, having fallen to around $31,000 on Tuesday. It remained roughly 43% below April’s record high, but around 25% higher for the year.

Bond yields edged higher on Thursday, with the yield on the key 10-year US Treasury note rising 0.5 basis points to 1.494%. Yields move inversely to prices.

The bond market has, in recent weeks, appeared unfazed by rising inflation. The 10-year yield dropped below 1.5% for the first time in a month on Wednesday. The dollar index climbed 0.15% to 90.26 ahead of the inflation data.

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Global stocks hover below record highs ahead of US inflation data, while oil falls for a 2nd day as demand optimism fades

Traders work on the floor of the New York Stock Exchange (NYSE)

Global stocks mostly edged lower on Tuesday as investors remained focused on inflation data, with the US consumer price index report due on Thursday.

Futures on the Dow Jones, S&P 500, and Nasdaq fell 0.1%, indicating a slightly lower start to trading later in the day.

The S&P index was still less than a quarter of a percent away from its all-time closing high a month ago, Deutsche Bank strategists said.

Biotech stocks added 1.13% to the Nasdaq the previous day, driven primarily by a record 38% jump in Biogen’s closing price after the company received FDA approval for its new drug to treat Alzheimer’s.

The growth rate of weekly COVID-19 cases is currently at its slowest since mid-March, according to Deutsche Bank. Cases in the US are rising at their slowest pace since March 2020, while India reported fewer than 100,000 daily cases for the first time in over two months. Numbers in the UK, however, have jumped 53% compared to last week, as the Delta variant spreads.

“While we remain alert to inflation risks, we believe the backdrop remains benign for stocks – with benefits most obvious for cyclical parts of the market, including energy and financials,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said.

Separately, lower commodity prices weighed on European stocks with basic resources declining 1.6% and energy down 0.25%, while auto stocks rose 0.8% and consumer products added 0.7%.

London’s FTSE 100 rose 0.2%, the Euro Stoxx 50 rose 0.0.7%, and Frankfurt’s DAX fell 0.1%.

Bitcoin traded 9% lower on Tuesday, while ethereum and dogecoin dropped more than 10%. The main cause behind this most recent crypto sell-off is unclear, but one theory suggests that US federal officials recovering a majority of the ransom Colonial Pipeline paid to a hacker group shows the digital asset can still come under official control.

President Joe Biden is expected to discuss cryptocurrencies at the G7 summit in the UK’s coastal county of Cornwall this weekend.

“Cryptos face an existential threat from major economies regulating or banning them,” said Jeffrey Halley, a senior market analyst at OANDA. “China has started, and the wolves are circling. The Colonial Pipeline saga was a case of flying too close to the sun. Attacks on critical infrastructure will not go unnoticed by important and powerful people.”

Asian equities mostly traded flat or lower. “In general, commodity-related sectors like materials and energy are leading the underperformance,” Deutsche Bank said.

The Shanghai Composite fell 0.5%, Tokyo’s Nikkei fell 0.2%, and Hong Kong’s Hang Seng fell 0.1%.

Oil prices retreated from highs as Brent crude fell 0.7% to $70.96, and West Texas Intermediate fell 0.6% to $68.75 per barrel.

“The price action has all the hallmarks of a very long speculative market getting nervous at the highs and is not indicative of an overall change in sentiment for energy,” Halley said.

“With some improvement in the pandemic situation in India and the recovery in the US, China and Europe remaining on track, oil should remain a buy on dips, with no warning signs coming from the technical momentum indicators,” he said.

Read More: UBS handpicks 7 real estate stocks to own in the post-pandemic world as they benefit from major changes brought on by the ongoing economic reopening

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