Key facts
- U.S. inflation data, including CPI, is expected to show a slight decrease in headline and core rates.
- Market speculation about a Federal Reserve rate hike next month may be tempered by the inflation and jobs data.
- Oil prices remain elevated near $90 per barrel due to geopolitical tensions.
- Several tech companies, including CoreWeave and Super Micro Computer, reported strong earnings and forecasts.
- Norway's sovereign wealth fund achieved record profits in the first half of the year.
Markets are bracing for the release of U.S. inflation data, with expectations that both headline and core consumer price index (CPI) rates will show a slight decrease. This anticipated moderation, coupled with recent softer employment figures, could reduce the likelihood of a Federal Reserve interest rate hike in the upcoming month, though current market pricing remains split on the outcome. Geopolitical tensions, particularly concerning Iran and attacks in the Red Sea, are keeping oil prices near $90 per barrel, posing an upside risk to inflation that will not be reflected in the July CPI report.
Despite inflationary pressures, the technology sector is showing strength. AI cloud provider CoreWeave saw its stock surge 15% after exceeding second-quarter revenue forecasts and upgrading its demand outlook, citing a substantial order backlog. Similarly, Super Micro Computer experienced a 7% jump following better-than-expected sales forecasts. In Asia, Taiwan's Foxconn reported a significant 35% increase in second-quarter profit, surpassing analyst expectations.
Broader market sentiment was buoyed by positive corporate results and a strong performance from Norway's $2.3 trillion sovereign wealth fund, which posted a record first-half profit of $184.3 billion. This tech-led boom is contributing to the flattering performance of investment portfolios. Early trading showed Wall Street futures rising, and Asian shares were lifted by a nearly 4% gain in South Korea's KOSPI index.
Globally, the food system is demonstrating resilience against events like El Nino, attributed to high inventories, technological advancements, and increased production from key exporters. The U.N. Food and Agriculture Organization notes that world farm production has consistently outpaced consumption and population growth since the 1980s, driven by improved crop varieties, fertilizer use, and irrigation.