LIVE MARKETS Business as usual

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BUSINESS AS USUAL (0759 GMT)

It’s business as usual on Wall Street it seems, in a show of confidence the Federal Reserve can smoothly turn off the tap on stimulus with little damage to the economy and company profits.

A U.S. inflation headline print at its highest since the 1980s at 7% came as no shock on Wednesday and risks the macro cycle faces from the upcoming rate-hike round, starting as early as March, look to be tomorrow’s problem.

The Nasdaq has clawed back more than half of this year’s losses caused by the spike in real yields paid by bonds, with the retail crowd jumping back in to buy the dip. This time they have concentrated on the megacaps they see as safer.

And following an initial jolt, the TINA argument that “there is no alternative” to the equity market staged a comeback, while 10-year U.S. government bond yields are down more than 5 basis points from this week’s peak just above 1.8% .

The day ahead could be less lively, though.

World stocks flat-lined in Asian trading hours after jumping 3% from Monday’s lows, and futures point to slight declines across European equity markets and in the U.S. later on.

Still, China’s short-term money rates jumped to four-month highs, on rising seasonal cash demand, as the market’s focus shifts to whether the central bank will trim policy rates to cushion the economic slowdown. read more

Oil is also set for a break after reclaiming pre-Omicron highs this week, in a blistering recovery that saw Brent prices jump 30% from December lows to near $85 a barrel.

The data calendar is light, but there is plenty of central bank speakers to focus on. Fed Governor Lael Brainard appears at Congress for a hearing into her nomination as deputy chair.

Key developments that should provide more direction to markets on Thursday:

EUROPE SET FOR A BREAK (0753 GMT)

European shares look set for slight losses at the open after two days of strong gains driven by commodity stocks and helped by easing bond yields that took pressure off the tech sector.

Futures on the Euro STOXX 50, DAX and FTSE indices were last trading down around 0.2% and 0.3%, with similar moves seen in U.S. equity derivatives.

Over in Asia, shares were dragged lower by weakness in Chinese economic data although investors seemed relieved that U.S. inflation data was not hot enough to force even faster monetary tightening by the Fed. read more

(Danilo Masoni)

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