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US wholesale prices confirm decelerating inflation trend

US wholesale prices barely moved upward last month, confirming hopes that inflation is on the way down in the world’s largest economy. Equity markets celebrated the data, seeing it as another sign that the US Federal Reserve (Fed) is likely near the end of its monetary policy tightening cycle.

Shane Strowmatt, LGT
Tempo di lettura
5 minuto
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Producer prices in the US increased by 0.1% in June compared with the previous month. The index for final demand moved up just 0.1% in June when compared to the same month of the previous year. Wholesale price changes often lead consumer price changes and are seen as an indicator of inflation in the coming months. The US Consumer Price Index was 3.0% in June, not far from the Fed’s target of 2%.

The dollar fell to a 15-month low against a basket of currencies on Thursday while US Treasury yields are close to ending the week with the largest weekly drop in several months.

In New York, the falling wholesale prices as well as lower weekly initial jobless claims (down 12,000 to 237,000) were taken as more support for the Fed to end its current tightening cycle. Markets expect a 25-basis-point hike in July but are mixed about further hikes later in the year. US stock markets continued to build on the week’s previous gains. Tech stocks were the largest winners with the Nasdaq-100 jumping 1.73% to 15,571.98 points. The Dow Jones Industrial closed up 0.14% at 34,395.14 points and the S&P 500 gained 0.85% to finish the day at 4510.04 points.

In individual stocks, shares of US crypto exchange Coinbase jumped 24.49% on Thursday following a decision by a US court in favour of Ripple Labs, which sells the XRP cryptocurrency, in a case brought by the US Securities and Exchange Commission (SEC). Coinbase relisted the XRP token on its exchange following the decision. The largest US crypto exchange is also involved in litigation with the SEC.

In Asia, stock markets were riding the wave of positive sentiment out of New York on Friday. In Tokyo, the Nikkei 225 was up 0.1% as traders were still interpreting industrial production data for May. In South Korea, the Kospi was trading up more than 1%. Australia’s S&P/ASX 200 gained 0.8%. Hong Kong's Hang Seng Index was up 0.4% in early Friday trading, while the Shanghai Composite gained 0.3%.

Corporate news in focus: Q2 figures from Ericsson, BlackRock, Wells Fargo, State Street, J.P. Morgan, Citigroup.

Economic data in focus: Swiss Producer and Import Price Index (08:30 CET), eurozone trade balance (11:00), US Import and Export Price Index (14:30), University of Michigan Consumer Sentiment Index (16:00).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.