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Who's afraid of an inflated PPI?

Who's afraid of an inflated PPI?

Gregor Stuart Hunter gives us a look at what the European and global stock markets will be like today. Did you think the U.S. market would be stopped by a PPI, no matter how big?

S&P futures held on to their 0.2% gain in Asian trading despite the rise in wholesale prices. Nasdaq's futures fell for the third day in a row. The yield on a 10-year Treasury bond in the United States was down by 2 basis points to 4.2732%.

According to CME Group's FedWatch, the market has given in on the hope of a 50-basis point rate cut by the Federal Reserve. The CME Group's FedWatch tool shows that traders still expect a 92.1% chance of a 25-basis point rate cut during the September meeting. This is compared to a 100% probability yesterday.

Data from Asia's two largest economies revealed that Japan's economy was booming last quarter, keeping shelves stocked in advance of Donald Trump's deadline for tariffs, while China showed renewed signs of slack.

Hong Kong shares fell by 1.2% following the release of disappointing Chinese economic data, including retail sales and production. The large-cap CSI 300 rose 0.5% on speculation that the data could justify additional stimulus. India and South Korea have closed their markets for public holidays.

The Nikkei recovered 1.2% on Friday after ending a six-day streak of gains on Thursday. It was the biggest single-day decline since April 11. Japanese GDP data showed that the economy expanded by an annualised 1,0% in the quarter April-June, exceeding analyst expectations and sending more signals to Bank of Japan which will meet next on September 19. The dollar fell 0.3% to 147.64 yen after ending a six-day winning streak on Thursday.

Brent crude fell 0.1% to $66.79 a barrel on the commodities market, just a few cents away from its two-month low. This is ahead of Friday's meeting between U.S. president Donald Trump and Russian President Vladimir Putin in Alaska.

Marc Velan is the head of investments for Lucerne Asset Management, based in Singapore. He said that "the first meeting does not seem to be a market-moving event – it's really more about setting up a subsequent meeting, which may prove more important." If a ceasefire occurs, the euro will rise and the dollar will fall.

The following are key developments that may influence the markets on Friday.

Eurozone reserve assets: July data

UK debt auctions reopen 1-month, 3-month, and 6-month government bond auctions

(source: Reuters)