Global Stock Markets Pull Back Ahead of Key U.S. Inflation Data

Market Reactions and Economic Indicators

By Stella Qiu and Lucy Raitano

Impact of U.S. Inflation Data

SYDNEY/LONDON, Feb 13 (Reuters) - Global shares retreated from record highs on Friday ahead of key U.S. inflation data, while worries about shrinking margins for major tech companies and AI disruption fears simmered beneath the surface after a week of selling.

Tech Sector Concerns

The MSCI all-country index slipped 0.2%, while Europe's STOXX 600 was flat in early trading. U.S. futures were also flat, following steep losses on Thursday that saw the technology-heavy Nasdaq Composite post its biggest daily drop in three weeks, tumbling 2%.

Currency and Commodity Movements

The selloff spilled over to Asia, where Japan's Nikkei fell 1.2%. U.S. transportation companies were the latest sector to get caught up in worries about AI disruption on Thursday.

Against a more stable market backdrop on Friday, market watchers pointed to a broader rotation towards more defensive parts of the market and a refocus on macroeconomics ahead of Friday's U.S. consumer inflation data.

"Markets have had a healthy correction, they've skimmed some of the froth," Arun Sai, senior multi-asset strategist at Pictet Asset Management, said. He noted that more speculative areas of the market like meme stocks, high retail sentiment stocks, crypto and non-profitable tech had taken a hit.

"The focus goes back to macro. We had a strong labour market print. If we get a reasonable inflation print today, that would then go back to my narrative that global macro isn't in a bad place," he said.

But turbulence from AI-related worries remains in focus. Worries over capital spending have hit shares in some of the world's biggest companies, including Apple, which fell 5% on Thursday, while sectors from software to wealth management have come under pressure from concerns about AI disruption.

"It is clear that investors are viewing developments in AI and AGI through a new lens, attempting to price a future that feels more uncertain and structurally disruptive than before," said Chris Weston, head of research at Pepperstone.

Elsewhere, The Financial Times reported on Friday that U.S. President Donald Trump plans to scale back some tariffs on steel and aluminium goods, citing people familiar with the matter.

TRADERS AWAIT U.S. INFLATION TEST 

The yield on benchmark 10-year U.S. Treasuries rose 2 basis points to 4.12% after falling 7 basis points overnight, its biggest drop since October 10.

Fed funds futures also rallied to reverse most of the losses after the payrolls data that led markets to pare back the chance of a rate cut in June. A move in June is now back in play, with the chance priced at 70%, and a total easing of 60 basis points expected this year.

Much attention will be on the U.S. inflation data due later in the day. Forecasts are centred on a monthly rise of 0.3% in the core measure, which would be enough to see the annual rate slow to 2.5% from 2.7% previously. 

"Even an in-line result would reflect a meaningful deceleration from December and that could bolster animal spirits and spark energy back into the cyclical trade," Jose Torres, a senior economist at Interactive Brokers, said.

Currency markets were stable ahead of the inflation report, with the euro down 0.1% against the dollar to $1.186. The yen shed 0.5% against the dollar to trade at 153.49, but remained on track for its strongest weekly gain in more than a year after Japanese Prime Minister Sanae Takaichi's historic election win last weekend.

The risk-sensitive Australian dollar took a step back, slipping 0.3% to $0.707, but was still headed for a weekly rise of almost 1%. 

Precious metals attempted to recover from heavy losses. Gold rose 1.1% to $4,973.66 an ounce, after losing over 3% on Thursday, while silver climbed 4.6% to $78.6 an ounce, having plunged 10% overnight.

Oil prices also rose after a 3% slide on Thursday. AP reported that a U.S. aircraft carrier is being sent from the Caribbean to the Middle East as tensions with Iran persist. [O/R]

U.S. West Texas Intermediate crude rose 0.3% to $63.03 a barrel, while Brent crude futures rose 0.24% to $67.7.

(Editing by Kim Coghill, Amanda Cooper and Mark Potter)