Technology stocks fall after Oracle results; Euro slides

BLOOMBERG

Tech stocks were in retreat as Oracle Corp posted slowing cloud sales, while the euro and pound weakened on concern the Europe faces a growing threat of stagflation.
Nasdaq 100 Index futures slipped 0.3%, signalling the index will pare September 11’s 1.2% rally. In Europe, packaging company Smurfit Kappa Group plunged 11% after it announced a deal to combine with WestRock Co. Tech stocks are set to be the centre of attention on Tuesday, with Apple Inc preparing to announce a new product lineup and SoftBank-owned chip designer Arm Ltd gearing up for the biggest initial public offering of the year. Meanwhile, Oracle put a spotlight on the risks of investing in high-flying tech shares.
Oracle plunged 10% in premarket trading, with Morgan Stanley analysts saying the results raise questions about the timing of generative AI demand turning into revenue across the broader business.
In Europe, the euro and the pound both traded around 0.2% lower against the dollar. UK wage growth held at a record high in the three months through July, a sign of persistent inflation that will keep pressure on the Bank of England to raise interest rates again. Germany’s economic recovery is in the spotlight as well with the release of the ZEW survey, with sentiment likely weighed down by tighter monetary conditions.  US inflation data are due on Wednesday and the European Central Bank holds its interest-rate decision on Thursday.
“Markets are gearing up to this week’s main events,” wrote ING Group NV strategists including Benjamin Schroeder. “It is not just about this Thursday’s ECB meeting, but also about crucial data in the US and UK ahead of next week’s respective central bank meetings.”
US consumers’ inflation expectations were mostly stable in August, but households grew more concerned about their finances and more pessimistic about the job market, according to a Fed Bank of New York  survey.
The consumer-price index report on Wednesday will provide the latest insight into how much further the Fed may need to go to pull inflation back towards its target. Monthly inflation is expected to accelerate to 0.6% in August, while core is seen stable at 0.2%, according to economists’ estimates.
“If we do see potentially a more sticky inflation number than the 0.6% expected by economists or 0.2% on core, I would expect to see the bond market start to potentially price in another rate hike before the end of the year, potentially as early as November,” Anthony Doyle, head of investment strategy at Firetrail Investments Pty Ltd, said on Bloomberg Television.
Stocks in Asia fluctuated and Chinese shares were back in the red. Gains triggered by news on Country Garden Holdings Co — which secured payment extension approval from its bondholders — were not enough to keep the positive sentiment going for long. In currencies, the yen fell and the greenback steadied after falling by the most in two months. The yuan was little changed after China’s central bank set its daily fixing rate at below 7.20 versus the dollar, another sign that it won’t tolerate excessive yuan weakness.
The Japanese government saw a solid demand during the auction of its five-year bond on Tuesday, with a higher-than-expected cut-off price. The sale was the first since central bank Governor Kazuo Ueda jolted markets with comments on the negative interest rate policy.
In commodities, oil edged up, trading near the highest level this year before reports that may offer further insight into the market’s balances.