As the safe-haven US dollar continued to strengthen after an unexpected reading of US inflation data, equity markets continued to plummet while oil rallied.
The inflation reading on an annual basis jumped 9.1% from 8.6%, prompting expectations of a more aggressive policy tightening by the Federal Reserve (Fed).
Atlanta Fed President Rapheal Bostic noted there was a possibility of an interest rate hike by 100 basis points during the July meeting.
Moreover, investor sentiment grew murky with JPMorgan Chase’s 2nd quarter profit report declining while Morgan Stanley’s results were seen as weak.
The string, Wall Street saw the Dow Jones Industrial average index fall 0.46%, the S&P 500 lost 0.30%while the Nasdaq Composite added 0.03%.
The European STOXX 600 index was down 1.53% and the benchmark MSCI of worldwide stocks was down 0.82%.
Meanwhile, the dollar remained strong at a 20 -year high with the greenback index up 0.351% while the Euro fell 0.47% at $ 1.0013 due to pressure from the European Central Bank (ECB) to lag behind in its monetary policy.
The British Pound trend was also seen declining 0.5% at $ 1.1832 while former Finance Minister Rishi Sunak won a majority of Conservative Party lawmakers ’support.
On the other hand, the 10 -year Treasury yield note was up 5.5 basis points at 2.961% while the 2 -year Treasury yield note was down 1 basis point at 3.134%.
Like to be reminded the inversion of the yield curve is usually seen as an indication that the market is expecting a recession.
For commodities, declining oil prices as investors digest large U.S. inflation data may dampen demand.
It has caused US crude oil to fall 0.07% at $ 96.23 and Brent crude oil to rise 0.06% at $ 99.63.
