The key facts

  • US September PPI: +1.3% m/m and +6.3% y/y — highest since March 2022 (m/m) and December 2022 (y/y); retail sales +0.8% m/m
  • 10-year Treasury yield fell 11 b.p. to 5.08%; the dollar declined 0.2% to 101.9
  • Kospi +3.9%, Nikkei 225 +2%, DAX +0.33%, FTSE 100 +1.08%, Dow Jones +1.08%

US inflation data set the tone for markets

Global markets traded on a positive trend on Thursday amid falling government bond yields and a recovery in technology stocks that had tumbled the day before. The direction of the markets is still being determined by US macro data: the producer price index (PPI) in September rose 1.3% month-on-month and 6.3% year-on-year, coming in above expectations. According to Anadolu, this is the highest since March 2022 in monthly terms and since December 2022 in annual terms. Combined with higher-than-expected consumer inflation, this reinforced concerns that the Fed could raise rates. Retail sales in September grew 0.8% m/m, beating forecasts, which supported expectations of continued tight monetary policy.

Reversal in the tech sector and falling yields

The negative trend in technology stocks, linked to doubts about the profitability of investments in artificial intelligence, reversed after statements by Fed Governor Kevin Warsh. Persisting concerns about the tech sector and its impact on economic growth pushed investors toward bonds, lowering yields. The 10-year Treasury yield fell 11 basis points to 5.08% on Thursday and is trading unchanged on Friday. The US dollar declined 0.2% to 101.9, and gold is trading slightly above the previous close on Friday — around $4,171 per ounce.

Oil, sanctions and US stocks

December Brent futures are falling 0.5% to $105.4 per barrel on Friday after the International Energy Agency agreed to release more than 20 million barrels of diesel to the market in addition to a record volume of oil from emergency reserves. The US Treasury added about 16 individuals and 10 companies, allegedly linked to Iran, to the sanctions list in order to limit Tehran's access to the global financial system. On the NYSE on Thursday, healthcare stocks led, offsetting the decline in tech shares: Nvidia lost 2%, AMD 1.5%, Intel 3%, while Eli Lilly gained 3.5%, UnitedHealth 2.8%, Walmart 1.5%. According to Barclays analysis, top executives of SpaceX and Tesla are considering a merger; against this backdrop, SpaceX shares fell 2.3%, Tesla 1.3%. Initial jobless claims for the week ending October 10 came in at 199,000, within forecasts. The Dow Jones gained 1.08%, the S&P 500 0.33%, the Nasdaq Composite 0.08%; on Friday, US indices opened higher.

Europe and Asia

European markets traded mostly positively on the back of strong corporate earnings and growth in healthcare stocks. The UK economy grew 0.1% m/m and 2.1% y/y, beating estimates; the pound rose to 1.33 against the dollar on Friday — the highest since September 30. Eurozone industrial production in August fell 0.5% m/m and 1.1% y/y, coming in above forecasts. The DAX 40 gained 0.33%, the FTSE 100 1.08%, the CAC 40 0.78%, while the FTSE MIB 30 fell 0.72%; on Friday, European indices opened higher. Asian markets rose by Friday's close on the recovery of tech stocks: SK Hynix +3.8%, Samsung Electronics +4.6%, Kioxia +3.2%, Sony +2.4%. The Kospi gained 3.9%, the Nikkei 225 2%, the Hang Seng 1.1%, the Shanghai Composite 1%.