A rebound for Nvidia after a run of losses helped lift sentiment for tech stocks – chipmakers rose overnight in Asia after Nvidia’s nearly 7 per cent rally sent the Nasdaq up more than 1 per cent. European stocks are trading a bit firmer this morning, after declining Tuesday, with the FTSE is up 0.55 per cent. The Dax rose almost 1 per cent before dipping a bit and the Cac is up 0.2 per cent, both helped by Airbus, and the other stocks affected by the planemaker’s profit warning yesterday, recovering some losses.
AO World shares rallied after a bumper rise in profits thanks to the incessant rain and the football. The wet winter boosted tumble dryer sales and the Euros saw everyone go online and buy a big telly. Deliveroo, a company that lets people too lazy to go to the shops or cook for themselves to gorge on hyper-processed junk, rose after DoorDash, which does the same but for Americans, was said to be interested in buying the company. What an economy.
Is inflation starting to reignite? Australia’s dollar rose to its highest level in two weeks against its US counterpart after inflation jumped to 4 per cent in May from 3.6 per cent in April. It was above the 3.8 per cent anticipated and suggests the Reserve Bank won’t cut soon – and hikes could be back on the table. Yesterday data showed Canada's inflation unexpectedly rose just three weeks after the Bank of Canada cut rates. CPI rose to 2.9 per cent from 2.7 per cent, against expectations for a decline to 2.6 per cent.
We need to ask whether we are seeing the start of second-round effects...it was the dog that didn’t bark but has not gone away. We talked before about how there has been a shift from worrying about inflation all year to worrying about growth/landings again – the case for cuts building narrative I have mentioned recently.
It makes this week’s US personal consumption expenditure inflation data all the more important for anyone trading the Fed. Headline PCE inflation is expected to be 2.6 per cent over the past 12 months, down from 2.7 per cent in April. Core inflation is forecast to have fallen to 2.6 per cent from 2.8 per cent, the lowest level since March 2021
Elsewhere, softs have taken a bit of a beating after their momentum-fuelled rally. At least food prices might moderate.
The Trader is written by Neil Wilson, chief market analyst at Finalto
