Decrease in Inflation in China
Data released by the National Bureau of Statistics in China on Wednesday indicated that the growth rate of the Consumer Price Index (CPI) in the People’s Republic of China for June was slower than the previous month and came in lower than expected.
Content
China
On the other hand, the Producer Price Index (PPI) contraction rate slowed compared to the previous month, reaching its lowest contraction rate since January 2023, about a year and a half ago, amid signs of sustained recovery in the industrial sector. According to the data, the Consumer Price Index (general inflation in China) grew by 0.2% year-on-year in June, while expectations were for about a 0.4% growth. This figure was also lower than the 0.3% growth rate recorded in May.
Oil
Rising Oil Prices
Oil prices rose in Asian trading on Wednesday, as industry data showed a larger-than-expected decline in U.S. inventories. However, an increase in distillate stocks somewhat offset optimism about tight markets. Crude oil prices suffered some losses this week due to talks of a potential ceasefire between Israel and Hamas, leading traders to price in some risk premium on oil. Nevertheless, recent reports indicated that an agreement was not close to being reached. Prices also fell on Tuesday as the impact of Tropical Storm Barry was much less than initially expected, with the storm weakening as it moved away from key oil infrastructure in Texas.
Markets
Possibility of Market Correction
A market correction in the stock market is highly likely due to uncertainties surrounding the U.S. presidential campaign, corporate earnings, and Federal Reserve policy. The likelihood of a 10% correction is highly probable from now until the elections, as the third quarter of the year is expected to be volatile. Expectations of the Federal Reserve cutting interest rates twice this year and the hype around artificial intelligence have led the S&P 500 Index to rise by 17% this year, following a 24% increase in 2023. However, the chances of further gains from now until the end of the year are very low, much lower than usual. The likelihood of stock prices closing higher at the end of the year is between 20% to 25% above current levels.
Decrease in Inflation in China