Because of the war: Inflation in the US jumped to a three-year high in April

16:05

The trading and investment platform Ituro concluded the first quarter of the year with a 19% growth in net revenue to $258 million, a 37% increase in net profit to $82 million and a 28% increase in adjusted net profit (Non-GAAP) which amounted to $86 million.

Net profit per share amounted to 91 cents, above market forecasts. April data indicate a 19% increase in customer assets to $18.7 billion and 63 million transactions, a 50% increase compared to the corresponding month.

15:39

Yoni Penning, Chief Strategist, Mizrahi Tefahot Trading Room, in response to the publication of the inflation data: “The gap between general and core inflation marks the main question regarding the inflationary consequences of the current round of price increases. Most of this inflationary wave, surely in retrospect, came from the service sectors. And now the question arises as to whether the current wave will be translated into the employment market.”

Regarding the consequences for interest rates, Fanning says that “in recent days we have seen the formation of expectations for an interest rate increase in the US as the Fed’s next move. The two upcoming decisions were and remain with a moderate probability of being taken down. But the curve rate is currently moving, so that if until recently the probability in the market was about 70% of an interest rate increase, during the coming year, it is now about 75% – not something that a correction back down in oil prices will not neutralize.”

15:30

While the war in Iran puts pressure on fuel and food prices worldwide, the Consumer Price Index published a few minutes ago indicates a 0.6% increase in prices in April, compared to the expectation of a 0.6% increase and a 0.9% increase in March.

Annual inflation stands at 3.8%, economists expected inflation of 3.7% compared to 3.3 in March, still so far from the Federal Bank’s target of 2%.

The core prices, that is, those excluding the energy and food components, rose by 0.4% – compared to expectations of 0.3% and 0.2% in March. On an annual basis, core inflation stands at 2.8% compared to expectations of 2.7% and 2.6% last month

13:10

While investors are looking forward to the consumer price index in the US, which will be published at 15:30 Israel time, in the meantime, the US debt market is seeing declines in rates and increases in yields, among other things, against the background of the impasse in talks between the US and Iran.

The ten-year yield climbs by about 1.5 basis points to a level of 4.43%, while the two-year yield increases by about 2 basis points to a level of 3.96%. The 30-year yield is climbing, it also crossed the 5% mark a little while ago.

The consumer price index for the month of April is the second to be released since the outbreak of the war against Iran – and it is expected that inflation will also register a significant jump this time. According to FactSet, the analyst consensus indicates a monthly increase of 0.6% in April and an annual increase of 3.7%; This, after the March price index showed a monthly increase of 0.9% and an annual increase of 3.3%. These are numbers far above the Federal Reserve’s price stability target, which is 2%.

12:15

The declines in Wall Street futures worsen a little. As of now, the Dow Jones is expected to open the day with a decrease of approximately 0.2%, the S&P 500 is expected to decrease by approximately 0.4% and the Nasdaq is expected to shed its value by approximately 0.8%.

10:45

The declines in Europe moderate slightly. As of now, the DAX index is down by about 0.7%, the FTSE is weakening by about 0.5% and the CAC is losing its value by about 0.4%.

CNBC reports that UK government bond yields jumped to a multi-decade high today amid pressure on UK Prime Minister Keir Starmer to resign, following the Labor Party’s heavy defeat in last week’s local elections. According to the report, the UK ten-year yield climbed 10 basis points to 5.103%.

Oil prices continue to climb and cross the $100 per barrel mark. Brent crude is currently trading around $106 per barrel, while US crude (WTI) is trading around $101 per barrel.

10:10

European stock exchanges open the trading day with falling rates. The Frankfurt Stock Exchange falls by about 1.3%, the Paris Stock Exchange weakens by about 1% and the London Stock Exchange loses about 1.1%.

9:20

Asia

In Asia, trading is in a mixed trend this morning, against the background of the fragility of the cease-fire between the US and Iran and the reports that President Trump is considering renewing military action against it. The Tokyo Stock Exchange rises by about 0.6%, the Hong Kong Stock Exchange trades stably, the Shanghai Stock Exchange weakens by about 0.4% and the Seoul Stock Exchange falls by about 2%, after approaching the level earlier during the trading day 8,000 thousand points.

After climbing yesterday, against the backdrop of the impasse in talks between the US and Iran, oil prices are registering slight increases this morning. Brent oil is trading around $105 per barrel, while American WTI oil is trading around $99 per barrel.

Wall Street

In the US, the New York Stock Exchange closed slightly higher last night, led by the technology sector, despite the worsening of tensions between the US and Iran. The S&P 500 index climbed by 0.2% and closed above the 7,400 point mark for the first time; The Nasdaq index climbed about 0.1%; and the Dow Jones added about 0.2% to its value.

As mentioned, the technology and chips stocks continued to gather a lot of interest and lead the gains: Micron Technology stood out in increases of 6.5%, along with Nvidia , AMD andIntel which continued the sector’s momentum.

stock monday which reacted sharply at the opening of trading after the publication of its financial reports with a double-digit increase of almost 20%, erased the gains during the day and closed with a 6.7% increase.

Jordan Rizzuto, Chief Investment Officer of GammaRoad Capital Partners, referred in a message to investors to the gains registered in the markets, despite the increased geopolitical tensions. According to CNBC, he referred to Wall Street as a “show me” market – a market where investors increasingly refuse to respond to risks, unless they materially disrupt economic or corporate fundamentals. Rizzuto also wrote that after having weathered the epidemic, rising inflation, aggressive interest rate hikes and concerns about tariffs in recent years, investors were conditioned to buy at low points in the market instead of withdrawing from it.

Marcy McGregor, head of portfolio strategy at Merrill’s Chief Investment Office and Bank of America Private Bank, took a similar approach, telling CNBC yesterday that she still feels good about the overall state of the markets. “If we experience weakness after the very strong recovery from the March low, I would see that as a buying opportunity, because this is a market that is fueled by corporate earnings, capital investment, and frankly – by a strong labor market,” she said. “There are many reasons to be optimistic.” And on the other hand, there are also those who ring their warning bells.

Bloomberg reported tonight that Michael Berry, who became famous as a result of correctly predicting the 2008 financial crisis, warned that the Nasdaq 100 index is headed for a dramatic reversal of trend; this, after a “parabolic” jump that catapulted the valuations of technology companies to unsustainable heights.

In a post on his blog, Berry wrote that the market is reminiscent of the peak of the dot-com bubble just before it burst, noting in particular the sharp jump in chip stocks, which has sent the Philadelphia Chip Index (SOXX) up nearly 70% since the end of March. According to him, according to his calculations, the Nasdaq 100 is trading at a multiple of 43 – well above the implied level of about 30. According to him, the reason lies in the fact that “Wall Street may exaggerate by more than 50% the profits of the companies with the fastest growth and the highest valuations”.

Berry recommended in his post to realize profits from the recent rally and reduce exposure to stocks in general, and in particular to those from the technology sector. He used harsh words to describe the situation in the markets and compared it to “the scene of a bloody car accident, minutes before it happens”.

“We are witnessing history in the making. In the stock market, this is not a good thing,” he said. “History teaches us that even if the party continues for another week, month, three months or a year, the end will be at much lower prices… We are reaching areas of ‘rare air’ (in the original: “rare air”), a situation so extreme that its consequences will be inevitable, no matter where people try to hide.”

Macro

Today, at 15:30 Israel time, the consumer price index for the month of April is expected to be published in the US – the second to be released since the outbreak of the war against Iran – and it is expected that inflation will also register a significant jump this time.

According to FactSet, the analyst consensus indicates a monthly increase of 0.6% in April and an annual increase of 3.7%; This, after the March price index showed a monthly increase of 0.9% and an annual increase of 3.3%. These are numbers far above the Federal Reserve’s price stability target, which is 2%.