MORNING BID-Inflation anxiety lingers
A look at the day ahead from Dhara Ranasinghe.
Inflation fears continue to dominate across stocks, bond and FX markets.
After data on Wednesday showed U.S. consumer prices jumped by the most in nearly 12 years in April, the S&P 500 index suffered its biggest one-day percentage drop since February.
Asian shares in turn hit seven-week lows while futures pointed to a weakness ahead in Europe and the United States. The dollar is holding on to its post-CPI gains =USD, and 10-year Treasury yields briefly tested 5-week highs US10YT=RR.
The 10-year U.S. breakeven -- the market-based gauge of expected inflation -- reached 2.56%, a level not seen in more than eight years.
In Europe, Germany's benchmark 10-year Bund yield is at its highest in almost two years, just 12 basis points away from positive territory DE10YT=RR.
While Fed vice chair Richard Clarida has already said the surprises from weak jobs data and a strong inflation won't not dent plans to maintain support for the economy, markets will keep a close eye on U.S. factory gate inflation data and weekly jobless claims numbers later on Thursday.
Action on crypto currencies too. Bitcoin fell more than 10% after Tesla CEO Elon Musk said his firm will no longer accept bitcoin for car purchases, citing environmental concerns. . His tweet comes less than two months after Tesla began accepting bitcoin for payment.
In earnings, Italy's Pirelli PIRC.MI topped earnings estimates, helped by stronger sales of high-value tyres.
Oil retreated from eight-week high as concerns about the coronavirus crisis in India, the world's third-biggest crude importer, offset predictions of a demand rebound.
Key developments that should provide more direction to markets on Thursday:
- Boeing Co BA.N wins approval from regulators for a fix of an electrical grounding issue, clearing way for their return to service.
- SoftBank shares slide after $23 bln buyback scheme not extended
- UK house price gauge hits highest since 1988 - RICS
- Bank of England Deputy Governor Jon Cunliffe speaks on digital currencies at 1200 GMT.
- Fed speakers include St. Louis President James Bullard
- Bank of Canada Governor Tiff Macklem to speak.
- U.S. 30-year bond auction
- Emerging markets: Central banks meet in Philippines, Serbia, Chile, Peru, Mexico
- U.S. earnings; Alibaba, Walt Disney
- Europe earnings: EDP, 3i, Hargreaves Lansdown, BT, Telefonica
Tesla deals Bitcoin a blowhttps://tmsnrt.rs/3y5l0KZ
(Reporting by Dhara Ranasinghe; editing by Sujata Rao)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.