Macro update
Asia markets falter: Asian equities traded lower as stronger-than-expected US inflation and the fragile Iran ceasefire dampened risk appetite, with MSCI’s Asia-Pacific index ex-Japan down 0.6% and the Nikkei 225 slipping 0.2%.
Korean stocks slide: South Korea’s Kospi dropped as much as 3.2% before paring losses, extending Tuesday’s sell-off after a powerful AI-driven rally left the market susceptible to profit-taking.
Oil remains elevated: Brent crude fell 1.2% to $103.86 and WTI declined 1.1% to $100.90, though both remained above $100 as the Iran conflict and continued closure of the Strait of Hormuz threatened global supply.
Fed hike bets rise: US inflation accelerated to 3.8% year-on-year in April, the strongest increase since May 2023, prompting markets to fully price out Fed rate cuts this year and lift the implied probability of a December hike to around 35%.
European markets set to rebound: European equities were expected to open firmer, with the FTSE 100 seen up 0.6%, the DAX 0.5%, the CAC 40 0.6% and Italy’s FTSE MIB 0.7%, as attention shifted back to earnings following Tuesday’s declines.
UK politics weighs on sterling: Sterling fell 0.45% against the dollar and weakened to its lowest level against the euro since 28 April, as investors monitored mounting pressure on Prime Minister Keir Starmer after Labour’s poor local election results, while 10-year gilt yields moved higher.