Friday, September 22

The occurrence of global stocks plummeting before CPI data and the dollar experiencing a decline is due to China’s sale.

Traders are seen working on the floor of the New York Stock Exchange (NYSE) in New york City, U.S. on July 12, 2023.

What is a summary?

The stocks of companies on Wall Street are cautioning as they anticipate CPI data.

A decrease in the value of the currency occurred before the inflation report.

European stocks rise as Italy provides reassurance of bank tax.

The oil price has hit its highest point since January due to a tight supply.

Global stocks fell on Wednesday, a day before the release of crucial U.S. inflation figures, while the dollar appreciated after Chinese data revealed the country’s economy had plunged into deflation last month.

Ahead of the June Consumer Price Index report, Wall Street experienced a drop in trading as investors cautioned. Despite mostly dovish statements from Federal Reserve officials this week, some analysts believe that inflation may have risen.

According to a Reuters poll of economists, headline inflation is expected to rise slightly to an annual 3.3% in July, while the core rate remains stable at 4.8%.

The market was slowed by high equity valuations and rising interest rates after Moody’s downgrade of U.S. government debt to 10 small and mid-sized UU banks, leading to a broad sell-off on Tuesday.

James Ragan, director of wealth management research at D.A. Davidson in Seattle, stated that the market has been experiencing a significant downturn over the past few months and has not undergone any consolidation.

“We’re continuing to move away from the significant technology-focused sector,” he declared.

Wall Street’s decline was largely caused by Nvidia (NVDA.O), with the other “Magnificent Seven” megacap stocks contributing equally to this year’ stock rally.

The MSCI global stock index gauge (.MIWD00000PUS) ended 0.30% lower, with the Dow Jones Industrial Average (DJI) falling 0.54%, the S&P 500 (SPX) losing 0.70%, and the Nasdaq Composite (NXIC) dropping 1.17% on Wall Street.

The pan-regional STOXX 600 index (.STOxX) in Europe rose 0.43% as investors were given a sense of security with the news that Italy’s new tax on banking profits would not exceed 0.1% of SMEs’ assets, while other countries are still considering increasing taxes on bank windfalls.

The sharing of the costs and benefits associated with higher rates has become a political question, as stated by Jim Reid, eminent strategist at the Deutsche Bank.

European bank stocks (.SX7P) experienced a rise of 1.01%, and Italy’s FTSE MIB share index increased by 1.31%.

China’s consumer price index plunged into deflation for the first time since February 2021, while producer prices in the world’ s major manufacturing center fell for a 10th consecutive month in July. The data from China on Wednesday came after trade figures out of China were disappointing the previous day.

The slowdown in China’s post-pandemic recovery and weakened demand at home and abroad have raised concerns that the country may be entering an era of slow growth similar to Japan’ “lost decades.”

Dealers reported that the yuan’s rally from a one-month low was partly due to state-owned Chinese banks selling the dollar, and the central bank’SEC filing with regulators indicated its discomfort with the recent declines in the currency.

The yuan experienced a 0.15 percent decline against the dollar to 7.2260, while the value of the currency index decreased by 0.04% to just 102.46, reversing Tuesday’s upward trend.

The U.S. Treasury Department’s sale of $38 billion worth of 10-year notes last week, which demonstrates the demand for government debt, coincided with a decline in Treasury yields due to choppy trade.

The benchmark note experienced a decrease of 0.6 basis points to 4.018%, and two-year notes, which typically reflect interest rate expectations, rose by 5 basis point to 5.861%, yielding 4.808%.

Following a sharp decline in U.S. fuel stocks and supply tightening due to output cuts from Saudi and Russian, oil experienced new highs, hitting its highest Brent benchmark since January.

Crude oil futures in the U.S. rose by $1.48 to $84.40 per barrel, while Brent crude was up $1.00 at $87.55, the highest level since Jan. 27.

Gold prices plummeted as investors stayed out of the loop before U.S. inflation data was released.

U.S. gold futures were down by 0.5%, closing at $1,950.60 per ounce.

Editing by Jonathan Oatis and Matthew Lewis, with Naomi Rovnick, Stella Qiu, and Ellen Zhang in Beijing.

The Thomson Reuters Trust Principles are the basis for our standards.

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