Japan CPI, Iran explosions, Israel strikes

Safe haven assets rose following reports of unconfirmed explosions in Iran, with the country’s Fars news agency reportedly saying that explosions were heard near the airport at the country’s central Isfahan city, but the reason was unknown.

Spot gold prices surged to a fresh all-time high of 2,411.09 per ounce, while the yen strengthened 0.45% to 153.93 against the U.S. dollar.

Prices of bitcoin fell 1.44% to $60,186, according to Coin Metrics data.

— Lim Hui Jie

Japan’s benchmark Nikkei 225 slid as much as 3%, mainly dragged by electronics and manufacturing stocks.

The largest loser on the Nikkei was semiconductor equipment supplier Lasertec, which plunged 7.5%.

Other stocks on the top losers list included counterparts Tokyo Electron, as well as Screen Holdings, which also dropped more than 7%.

Japan’s headline inflation rate came in at 2.7% in March, easing from the 2.8% recorded in February.

Core inflation in the country stood at 2.6%, in line with expectations from economists polled by Reuters and down from February’s 2.8%.

The so called “core-core” inflation metric used by the Bank of Japan came in at 2.9% from 3.2%, the first time that the index has fallen below 3% since November 2022.

— Lim Hui Jie

The recent stock selloff has led to a rise in some oversold signals, according to Chris Verrone, Strategas head of technical and macro research.

Around 30% is currently trading above its 50-day moving average, close to the 20% range “worth targeting in uptrends,” he wrote in a Thursday note.

“Yesterday’s pop in put/call ratios + the recent increase in “short” S&P ETF volumes have caught our eye as price action begins to affect behavior,” Verrone said.

To be sure, market leadership is ultimately more important, he noted. Utilities have notably started to pick up even as rates have risen, which Verrone believes is worth keeping an eye on.

“The more important question on our mind is what character does leadership assume on any bounce and whether the pro-cyclical tone that has been so dominant for much of the last 6 months can resume? Discretionary vs. Staples has consolidated but is borderline oversold… important for this to respond affirmatively over coming weeks,” said Verrone.

— Hakyung Kim

Wall Street could be mistaken in its hope that a recent uptick in inflation is an irregularity as opposed to a longer and more worrying trend, according to MRB Partners.

“The prevailing consensus is that inflation’s recent pickup is an anomaly, and that inflation will return to its low pre-pandemic run-rate ahead,” the firm wrote on Wednesday. “The last three CPI reports support MRB’s view that the consensus is mistaken.”

Instead, inflation will likely run at a 3% to 4% clip, according to MRB. The Federal Reserve’s preferred inflation gauge, the personal consumptions expenditures index, will also “reaccelerate later in the year,” the firm notes.

“Unlike the Fed and the consensus, we believe that ultimately economic growth matters greatly for inflation,” the independent research firm said.

— Brian Evans

Bitcoin mining stocks rose on Thursday ahead of the imminent “halving” event, which will cut their main stream of revenue in half and is estimated to take place in the next couple of days.

Marathon Digital rose 7%, Riot Platforms gained more than 4% and Iris Energy was up 8%. CleanSpark, which is one of the only miners still up for the year, rallied 13%.

Many of the publicly listed miners have been preparing for it by making big purchase orders for new mining equipment or increasing their electricity capacity and growing their hash rates. Nevertheless, uncertainty ahead of the halving has pressured mining stocks, most of which are down double digits for the year.