Morning Bid: The chips are blue

By Mike Dolan

June 10 (Reuters) - What matters in U.S. ‌and global markets today

By ​Mike Dolan, Editor-at-Large, ​Finance and Markets

The unnerving thing about Tuesday's relapse in U.S. tech stocks is that it happened even as oil prices fell sharply during the session, showing that stock market nervousness extends well beyond the energy story.

On that front, crude prices ‌were volatile early on Wednesday after the U.S. and Iran traded missile strikes overnight - the most alarming direct exchange ⁠between the sides two months into a very shaky ceasefire.

I’ll get into that and more below.

But first, check out my latest column on why the stock market is rising ‌in importance for a growing number of ‌employees and households.

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.

THE CHIPS ARE BLUE

The SOX chip index fell back nearly 2% on Tuesday, although the midday ​selloff had been much deeper at over 8%. The equities mood darkened further on Wednesday, with Asian indexes slumping and U.S. futures in the red before the bell.

That comes ahead of the U.S. May CPI report, which will take centre stage on Wednesday. Headline inflation is ⁠expected to creep above 4% for the first time in three years, while core inflation is seen stalking 3%.

The report will not only set the tone for stocks but also comes ahead ​of a 10-year Treasury auction later in the day, with a Federal Reserve rate hike by year-end now getting baked into futures markets.

The ECB is expected to deliver a hike as soon as tomorrow, while Japanese ​wholesale price inflation data on Wednesday cemented expectations that the Bank of Japan ‌will follow suit next week. Chinese producer inflation data also showed price heat there last month.

One of the few strands of optimism over the past 24 hours was oil's sharp fall to a seven-week low on Tuesday. ⁠That came amid unverified U.S. claims that oil exports through the Strait of Hormuz were rising, even as Washington and Tehran struggle to reach a deal.

But the renewed U.S.-Iran hostilities muddied the picture somewhat, with crude prices rising before unwinding those gains in volatile trading early on Wednesday. And despite oil's broader fall, there's still ⁠some unease over a potential supply crunch this month as U.S. oil inventories dwindle.

All that sets a noisy and bumpy backdrop to the marquee SpaceX IPO later ​in the week - an event that some suggest is contributing to market volatility as investors clear the decks elsewhere to take up the new offer.

Chart of the day

The U.S. trade deficit narrowed in April as exports of petroleum products and capital goods jumped to record highs. Petroleum exports increased to a record high of $37 ‌billion from $28 billion in March, driven by both higher volumes and elevated oil prices tied to the Middle East conflict.

The U.S. is a net oil exporter and the country's petroleum trade surplus swelled to a record ‌high of $17.7 billion from $9.4 billion in March.

Today's events to watch

• U.S. May CPI (8:30 a.m. EDT)

• U.S. 10-year note auction (1 p.m. EDT)

Want to receive the Morning Bid in ⁠your inbox every weekday morning? Sign up for the newsletter ‌here. You can find ROI on the ​Reuters website, and you can follow us on LinkedIn and X.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from ‌bias.

(By Mike Dolan)

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