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U.S. CPI, FTX meltdown hits crypto, Putin skips G20 – what’s moving markets

U.S. CPI, FTX meltdown hits crypto, Putin skips G20 – what’s moving markets By

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Economy 1 minute ago (Nov 10, 2022 12:18)

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By Geoffrey Smith — The U.S. inflation rate is set to fall for the fourth straight month – but make sure to read beyond the headline numbers. Cryptocurrencies reel again as Binance abandons its half-hearted effort to rescue FTX, leaving Sam Bankman-Fried’s empire on the brink of collapse. Stocks are set to edge higher, but are in a holding pattern ahead of the CPI print. Joe Biden says he intends to run for re-election after escaping a drubbing in the midterms, but there’s silence from his predecessor Donald Trump. Oil prices fall again after weak lending data out of China – and Vladimir Putin is too busy dealing with a worsening situation in Ukraine to attend the G20 summit. Here’s what you need to know in financial markets on Thursday, 10th November. 

1. CPI set to fall, but the devil will be in the details

Headline U.S. inflation is expected to have eased for the fourth month in a row when official data are published at 08:30 ET (13:30 GMT), but a granular look at the numbers is likely to show a less encouraging picture.

Consensus forecasts see the year-on-year CPI rate falling to 8.0% from 8.2%, but the month-on-month dynamic is set to remain strong, with a 0.6% increase overall prices and a 0.5% rise in core prices. That reflects accelerating inflation in services, which is taking over from energy and food as the main driver of inflation.

Weekly jobless claims are due at the same time, but predate the drama of this week’s job losses at Big Tech. Regional Federal Reserve Presidents Esther George and Loretta Mester are both due to speak later and may have something to say about both sets of numbers.

2. Crypto slumps as Binance gives the coup de grace to FTX 

Cryptocurrency is in full-on retreat mode after Binance pulled out of a rescue of rival FTX, saying its rival’s problems were too big to fix.

FTX’s spectacular fall from grace is another devastating blow to the crypto universe, underlining that the backing of big-name venture capitalists during a time of easy money was not the guarantee of soundness that many believed it to be. Sequoia Capital, which participated in FTX’s funding round at a valuation of $32 billion earlier this year, said it would write down its investment to zero.

Bitcoin slumped to a two-year low of $15,588 overnight before recovering to trade at $16,291 by 06:20 ET, down 8.7% on the day. It’s lost around a quarter of its value since the scale of FTX’s problems started to become clear. FTX’s native token FTT, meanwhile, has gone the same way as Celsius Network’s earlier this year, down over 90% in a week. FTX has an $8B shortfall in its accounts, according to the Financial Times’ sources.

3. Stocks set to edge higher before CPI report; EV makers, luxury groups in focus

U.S. stocks are set to open higher later, recovering a little of their losses on Wednesday, which were largely triggered by the rout in crypto (as well as concerns at the outturn of the midterm elections.

By 06:20 ET, Dow Jones futures were up 83 points, or 0.3%, while S&P 500 futures were up 0.4% and Nasdaq 100 futures were up 0.6%.

Stocks likely to be in focus later include Chinese EV maker Nio (NYSE:NIO), which rose premarket after standing by its forecasts of a big jump in revenue in the current quarter as production of its ET5 sedan ramps up. Its net loss widened sharply, though. Also in focus will be AstraZeneca (NASDAQ:AZN), after the Anglo-Swedish pharma company handsomely beat estimates for the third quarter and raised its full-year guidance. Steelmaker ArcelorMittal (NYSE:MT), by contrast, missed forecasts overnight.

Becton Dickinson (NYSE:BDX), Ralph Lauren (NYSE:RL) and Tapestry (NYSE:TPR) head the list of early earnings updates.

4. Biden announces intention to run in 2024; silence from Trump

U.S. President Joe Biden declared his intention to run for re-election in 2024 after escaping a widely-predicted wipe-out at the midterm elections on Tuesday.  

While Biden Democrats appear certain to have lost control of the House of Representatives, they may yet keep control of the Senate, although that will depend on a run-off election in Georgia, as was the case in 2020.

By contrast, there has been no announcement from Donald Trump as to his intentions for 2024, after a number of candidates endorsed by him underperformed in their races. The elections appear to have provoked a clear swing in Republican opinion, acknowledging that Trump may not represent their best chance of success in the race for the White House in 2024.

5. Oil slips on weak China credit data; Putin to skip G20 as Ukraine problems mount

Crude oil prices hit a new two-week low on fresh evidence of China’s economic slowdown: new loans extended by the banking system fell to their lowest in over five years in October, according to the People’s Bank of China.

The outlook for global oil supply meanwhile looks muddier after Russia’s retreat from the key Ukrainian city of Kherson, announced on Wednesday, undermined President Vladimir Putin’s hold on power. Putin will not attend the G20 summit in Indonesia later this month, the Foreign Ministry said.

By 06:40 ET, U.S. crude futures were down 0.8% at $85.16 a barrel, while Brent futures were down at $92.10 a barrel.

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