(Corrected the capitalization in the company name CoreWeave.)
By Mike Dolan
Oct 15 (Reuters) – What matters in US and global markets today
By Mike Dolan, Editor-At-Large, Finance and Markets
Is an October Fed hike back on the table? The release of hot headline and core September US inflation figures sent markets into a tailspin on Wednesday, with futures markets at one point showing as much as a 50-50 chance that the Federal Reserve may raise interest rates again this month.
Even if the central bank is able to sidestep another hike just days before the US midterm elections, some think the Fed could hike rates in December by as much as 50 basis points. Fed Chair Kevin Warsh will be in the spotlight on the issue when he speaks early tomorrow at the IMF meeting in Bangkok.
I’ll get into all that and more below.
But first, check out my latest column on the worrying weakness in the US if you strip away the AI boom.
And listen to the latest episode of the Morning Bid daily podcast. Subscribe to hear Reuters journalists discuss the biggest news in markets and finance seven days a week.
COREWEAVE UNRAVELS
The latest inflation and rates jolt relit the fuse on this week’s AI stock selloff, with notable declines in the debt and equity of data center builder CoreWeave as well as Oracle. Chip and tech stocks fell more broadly, pushing the S&P 500 down by more than 1%.
That selloff ripped through Asian equities again today, with South Korea’s Kospi tanking more than 7% and the Nikkei falling 5%.
For bonds, an interesting dynamic is now playing out. Treasury yields spiked initially on the inflation news and rethink of a potential October Fed hike. But yields then retreated sharply as the AI complex came under fire, reflecting a “flight to safety” amid fears of a big stock market correction.
Yesterday was another down day for the big US banks, as their sweep of disappointing earnings this week added to the broad market pressure.
And if you were hoping for any serious relief from energy prices, then look away. Crude prices have eased slightly early on Thursday, with Brent now trading around $104 a barrel, as the Trump administration says it is considering easing sanctions on so-called shadow fleet vessels that have transported oil and refined products from countries including Russia, Iran and Venezuela.
But the geopolitical backdrop is only getting messier. Ukrainian President Volodymyr Zelenskiy spoke of “betrayal” on Thursday for what he perceives as the President Trump’s favoritism toward Russia.
