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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, and 10-year
Treasury yields briefly tested 5-week highs.
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.
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 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 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
(Reporting by Dhara Ranasinghe; editing by Sujata Rao)
