The SOX chip index fell back nearly 2% on Tuesday, although the midday selloff had been much deeper at over 8%. The equities mood darkened further on Wednesday, with Asian indexes slumping and U.S. futures in the red before the bell.
That comes ahead of the U.S. May CPI report, which will take centre stage on Wednesday. Headline inflation is expected to creep above 4% for the first time in three years, while core inflation is seen stalking 3%.
The report will not only set the tone for stocks but also comes ahead of a 10-year Treasury auction later in the day, with a Federal Reserve rate hike by year-end now getting baked into futures markets.
The ECB is expected to deliver a hike as soon as tomorrow, while Japanese wholesale price inflation data on Wednesday cemented expectations that the Bank of Japan will follow suit next week. Chinese producer inflation data also showed price heat there last month.
One of the few strands of optimism over the past 24 hours was oil's sharp fall to a seven-week low on Tuesday. That came amid unverified U.S. claims that oil exports through the Strait of Hormuz were rising, even as Washington and Tehran struggle to reach a deal.
But the renewed U.S.-Iran hostilities muddied the picture somewhat, with crude prices rising before unwinding those gains in volatile trading early on Wednesday. And despite oil's broader fall, there's still some unease over a potential supply crunch this month as U.S. oil inventories dwindle.
All that sets a noisy and bumpy backdrop to the marquee SpaceX IPO later in the week - an event that some suggest is contributing to market volatility as investors clear the decks elsewhere to take up the new offer.
With that, onto today's column.
