US Inflation Data Boosts Tech, But French Political Fears Hammer European Markets

This global market update reflects how investor sentiment shifted on Thursday amid Fed rate cut hopes, political turmoil in Europe, and caution in Asia. Stocks, bond yields, and currencies moved in mixed directions across regions, highlighting diverging global dynamics.

US Market Update: Tech Strength and Soft Inflation Data

• • Stock Markets: Tech shares propelled the Nasdaq and S&P 500 to new record highs, while the Dow Jones Industrial Average finished lower.
    

     

    • • S&P 500: +0.23% to 5,433.74
    • • Nasdaq Composite: +0.34% to 17,667.56
    • • Dow Jones Industrial Average: −0.17% to 38,647.10

• • Bond Yields: Treasury yields fell after the soft producer price data but pared some declines following a weak 30-year auction. The 10-year Treasury yield settled lower.
    

     

    • • US 10-Year Yield: Decreased by approximately 7 basis points to around 4.24%.

• • Currency: The US Dollar Index (DXY) was volatile but ended the day slightly higher, finding support as European political uncertainty weighed on the Euro.
    

     

    • • US Dollar Index (DXY): +0.05% to 105.25

• • Economic News: The Producer Price Index (PPI) for May unexpectedly fell by 0.2%, against expectations of a 0.1% increase. Core PPI was flat. Initial Jobless Claims rose to 242,000, the highest level in 10 months, suggesting a potential cooling in the labor market.

Europe in Focus: French Political Turmoil Weighs on Equities

• • Stock Markets: European markets closed sharply lower as political uncertainty, particularly concerning the upcoming French legislative election, continued to spook investors.
    

     

    • • Euro Stoxx 50: −1.97%
    • • DAX (Germany): −1.96%
    • • CAC 40 (France): −1.99%
    • • FTSE 100 (UK): −0.63%

• • Bond Yields: The spread between French and German 10-year government bond yields widened further, reaching its highest level since 2017, reflecting investor anxiety over France’s fiscal outlook. German bond yields fell as investors sought safety.
    

     

    • • Germany 10-Year Bund Yield: Fell to approx. 2.47%
    • • France 10-Year OAT Yield: Rose to approx. 3.16%

• • Currency: The Euro weakened significantly against the US Dollar due to the political turmoil in France, hitting its lowest point in over a month.
    

     

    • • EUR/USD: Dropped by about 0.50% to trade near 1.0740.

• • Economic News: Eurozone industrial production for April fell by 0.1%, missing expectations for a slight gain.

Asia Market Update: BOJ in Spotlight as Traders Stay Cautious

• • Stock Markets: Asian markets were mixed as investors reacted to the Fed’s updated dot plot and the US inflation data. Japanese stocks edged higher, while Chinese markets were subdued.
    

     

    • • Nikkei 225 (Japan): +0.29%
    • • Shanghai Composite (China): −0.28%

• • Bond Yields: The Bank of Japan (BOJ) is in focus ahead of its policy decision today. The Japanese 10-year government bond yield was slightly higher at around 0.98% as traders awaited clues on potential tapering of bond purchases.

• • Currency: The Yen held steady against the dollar ahead of the BOJ meeting.
    

     

    • • USD/JPY: Traded around the 157.00 level.

• • Economic News: There were no major economic releases from the region. All eyes are on the Bank of Japan’s policy announcement and press conference later today.

Volatility is likely to persist as investors navigate diverging signals from central banks, political uncertainty, and regional economic data. Insights from this global market update reinforce the importance of tracking cross-asset movements to understand shifting sentiment across global markets.