The Market News Today: China’s Deflation Stirs Concerns for US Economic Outlook

China’s Inflation Lags, Raising Red Flags for Economic Health

China’s June inflation numbers missed the mark, with consumer prices up just 0.2% from last year, falling short of the 0.4% forecast. Factory prices dipped 0.8%, in line with expectations. Core inflation, which leaves out food and energy, inched up 0.6%. Pork prices jumped, but beef took a hit. Tourism spending cooled off a bit. Market watchers are worried about deflation risks, pointing to weak spending at home. This might force China to lean on exports to keep the economy moving. It’s a stark contrast to the U.S., where prices are still running hot. Traders are now eyeing Friday’s trade report for more clues on China’s economic direction.

Powell Warns: High Rates Could Hurt Growth, But Economy Still Solid

Fed Chair Powell, ahead of Capitol Hill appearances, voiced concerns about keeping rates too high for too long. He noted strong economic and job market conditions, with easing inflation. Powell stressed balancing inflation control with avoiding economic weakness. The Fed’s rate stands at 5.25%-5.50%, its highest in 23 years. Markets expect rate cuts starting September. Powell cited “modest progress” on inflation but emphasized the need for more data. He also highlighted robust private demand and solid consumer spending, despite some economic slowdown signs.

Microsoft Drops OpenAI Board Seat Amid Regulatory Scrutiny in EU, US

Microsoft has relinquished its observer seat on OpenAI’s board, citing regulatory concerns in Europe and the US. The company’s Deputy General Counsel stated the seat was no longer necessary due to the board’s progress. This move comes as the European Commission considers antitrust investigations into the Microsoft-OpenAI partnership. While the EU concluded the seat didn’t affect OpenAI’s independence, it’s seeking more third-party views. Microsoft’s $13 billion investment in OpenAI has positioned it as a leader in AI development, sparking regulatory interest.

Inflation Reports Loom as Tesla’s Surge Brightens Tech Outlook

Stock futures held steady during Wednesday’s pre-market session after S&P 500′s record close. Fed Chair Powell warned about keeping rates high for too long. Investors now focus on upcoming CPI and PPI data, which could influence rate cut predictions. Tesla’s remarkable 10-day winning streak, fueled by strong Q2 deliveries, showcases tech sector strength. The EV maker’s 43% jump since June 24 stands out against its modest 5.6% year-to-date gain. This rally, set against mixed market signals, highlights the ongoing tug-of-war between Fed policy, economic indicators, and standout stock performances in the current market.

Oil Rebounds as Gas Struggles: Market Trends Diverge, Says Reuters Analyst

According to John Kemp at Reuters, the oil and gas markets have shown contrasting trends recently. Oil has seen a reversal of bearish sentiment, with portfolio investors returning to a neutral position after heavy selling in early June. Hedge funds have been net buyers of oil futures for four consecutive weeks. In contrast, natural gas has faced challenges, with portfolio managers selling futures for two consecutive weeks due to persistent storage surpluses. Despite heatwaves, gas inventories remain high, pushing back market rebalancing and keeping prices low for the foreseeable future.