Today the main focus of investors is on US inflation data

Today, the US will release inflation data for June. Inflation is expected to fall from 5.3% to 5.0% year-over-year. Core inflation (excluding food and energy prices) is also expected to fall from 4% to 3.1% year-over-year. Although the issue of a rate hike at the July meeting is almost settled, traders are expecting a softer stance from the US Fed after the data release. Several Fed officials said yesterday that the Fed is nearing the end of its rate hike cycle, which sparked a rally in risk assets this week while also sending the dollar lower.

Shares of 3M (MMM) jumped nearly 5% after Bank of America raised its rating on the industrial and consumer products maker to “neutral” from “downgrade.” Wall Street’s major banks will kick off the second-quarter reporting season on Friday. Banks are expected to report higher profits in the second quarter as higher interest payments offset a downturn in deal-making. That said, JPMorgan (JPM) could lead the sector’s growth. Jefferies upgraded JPM to “buy” from “hold,” noting the strength of its balance sheet and earnings potential.

German inflation continues to rise. The consumer price level rose by 0.3% over the last month. In annualized terms, inflation rose from 6.1% to 6.4%. The ECB is likely to continue to hike until September, and then it will depend on new inflation and labor market data.

There are growing expectations that the oil market may tighten in the second half of the year, supported by signs of oil production cuts and Saudi Arabia’s recent pledge to cut production by 1 million barrels per day in July. These have contributed to the rise in oil prices in recent days. The US will also release crude oil inventories data for last week today, where a decline of 2.2 million barrels is expected.

Asian markets were trading higher on Tuesday. Japan’s Nikkei 225 (JP225) was up by 0.04% for the day yesterday, China’s FTSE China A50 (CHA50) added 0.56%, Hong Kong’s Hang Seng (HK50) increased by 0.97% for the day, and Australia’s S&P/ASX 200 (AU200) close positive by 1.50%.

The Chinese Communist Party-backed China Securities Journal reported on Wednesday that Beijing is likely to increase stimulus spending after a series of weak economic indicators in the country. Increased stimulus spending in China is expected to boost economic growth in the country, which in turn could boost oil demand amid rising domestic fuel consumption.

The Reserve Bank of New Zealand (RBNZ) left rates unchanged at 5.5% at its monetary policy meeting (MPC) today. Overall, the statement and minutes showed a dovish tone, raising the possibility that the RBNZ has ended the current tightening cycle, especially given the fact that the New Zealand economy is already in recession. The Reserve Bank said it expects core inflation to fall further from its peak and for core inflation to fall as capacity constraints ease. The Central Bank’s next monetary policy statement will be released on August 16.