(The opinions expressed here are those of the author, a
columnist for Reuters.)
By Mike Dolan
July 14 (Reuters) -
What matters in U.S. and global markets today
By Mike Dolan, Editor-at-Large, Finance and Markets
Oil boils again just as the June inflation report is set for
release later today, with the renewed U.S. blockade of Gulf
shipping the latest step in a flare-up of hostilities between
Washington and Tehran.
President Donald Trump's decision to reinstate a blockade on
Iran's ports and impose a 20% charge on all movement through the
Strait of Hormuz shows the latest burst of violence is all about
control of the critical waterway.
I'll get into that and more below.
But first, listen to the latest episode of the Morning Bid daily
podcast, where we discuss the latest oil spike and the
forthcoming June inflation report.
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OIL BOILS
With Iranian missiles hitting ships in the Gulf again amid a
third night of U.S. strikes, Hormuz traffic has slowed to a
two-month low, according to shipping data.
World crude oil prices are now well above $80 per barrel again
after leaping more than 9% on Monday and extending those gains
early on Tuesday, trading at levels last seen before the interim
ceasefire deal was signed in mid-June.
The renewed jump in crude prices somewhat reduces the impact of
the headline U.S. CPI release today. It's expected to have
fallen back from three-year highs above 4% owing to the recent
energy price retreat, but the latest fighting makes that moot.
Investors' focus will be on core inflation, which is still close
to 3%. Fed Governor Chris Waller said on Monday that the Fed is
not going to get this back to target simply by staring at it. It
will have to act.
Fed Chair Kevin Warsh will give his first testimony to
Congress later on Tuesday. He's no fan of forward guidance,
which may be wise at the moment, so markets are unlikely to get
much of a steer. But futures still have a Fed hike priced by
year-end and a significant chance of one as soon as this month.
Stocks are under pressure from the new energy and interest-rate
tensions, with chip stocks still taking a beating as the U.S.
quarterly earnings season kicks off this week. The big banks are
due to report today.
South Korean chipmaker SK Hynix, which listed ADRs on Friday,
tumbled sharply again on Monday, giving back all of its Friday
gains. The hugely volatile stock and wider Korean market swung
violently again on Tuesday, plunging early in the Seoul session
but rallying by the close, with Hynix ending nearly 4% higher on
the day.
With the earnings season now in the spotlight, TSMC's sales
update beat forecasts yet again on Monday, illustrating the
persistence of chip demand.
And China's exports surged more than forecast in June too, with
imports also ahead of estimates. Chip and tech equipment were a
large part of both readings, but car exports also hit a record
one million in the month.
Chart of the day
For all the tensions in the Gulf and ongoing U.S. tariff
pressures, the world economy at large seemed to be pumped-up
going into the summer.
China's exports surged in June, buoyed by orders for chips to
fuel the global AI boom, but also automobile shipments, which
topped one million for the first time.
And even though some have worried about China's reliance on
exports to meet its growth targets, imports also comfortably
beat forecasts last month. The stronger-than-expected trade
performance keeps China on track to post a surplus topping $1
trillion for a second straight year.
Today's events to watch
* U.S. June CPI (8:30 a.m. EDT)
* U.S. corporate earnings: JPMorgan, Bank of America,
Goldman Sachs, Wells Fargo, Citigroup
* Fed Chair Kevin Warsh speaks before the U.S. House
Financial Services Committee (10 a.m. EDT)
* Fed's Michael Barr, Lisa Cook and Michelle Bowman, and
Chicago Fed's Austan Goolsbee, all speak
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Opinions expressed are those of the author. They do not reflect
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