U.S. Inflation Moderated but Stayed at Elevated 6.5 Percent as Expected

The U.S. Consumer Price Index climbed by 6.5% in the year through last month, down from 7.1% in November, as prices declined slightly on a monthly basis. The annual inflation rate was the slowest since October 2021, a pullback that came as gas prices dropped and airfares declined. Core inflation climbed 5.7% in December from a year earlier, compared with 6.0% previously and in line with what forecasts had expected. After hitting a high of over 9% last year, the headline CPI number for December was expected exactly at 6.5%, so it's neutral news for the markets.

Corporatewise, expansion of Tesla’s (TSLA) plant in Shanghai has been delayed, over data concerns that risk putting a roadblock in the way of the U.S. EV-maker’s ambition to keep the same growth rates in China. The so-called phase-three expansion originally slated to start mid-year would have seen the plant’s capacity double to around 2 million cars a year, said the people. Elsewhere, Moderna (MRNA) shares declined after some advisers to the Food and Drug Administration (FDA) raised questions about the company’s transparency in reporting results about the effectiveness of its Covid-19 booster. Shares of rival vaccine providers Pfizer (PFE), BioNTech (BNTX), and Johnson & Johnson (JNJ) also fell.

Commoditywise, WTI crude oil futures are trading over $78.67 a barrel for the first time this year, while gold prices hit another new 8-month high. The U.S. dollar, DXY, lost ground to the euro and pound, but was higher versus the yen. Most major cryptocurrencies also traded sharply higher.

The German Chambers of Commerce and Industry earlier today said that more than half of Germany's companies are struggling to fill vacancies due to a lack of skilled workers, in the latest sign of growth headwinds hitting Europe's largest economy.

Asian shares were mixed earlier this morning. Thus, Japan’s benchmark Nikkei 225 wobbled in early trading but finished up less than 0.1% at 26,449. Australia’s S&P/ASX 200 jumped 1.18% to 7,280.40. South Korea’s Kospi gained 0.24% to 2,365.10. Hong Kong’s Hang Seng advanced 0.36% to 21,514.10, while the Shanghai Composite shed as little as 0.05% to 3,163.45.

Japan’s Finance Ministry reported the country’s current account returned to the black in November for the first time in two months, reflecting a slimming of the trade deficit as the yen regained value against the U.S. dollar and other currencies.

Taiwanese chipmaker TSMC (TSM) warned that its Q1 revenue would drop as much as 5% and it would slash annual investment as the major Apple (AAPL) supplier expects softer demand due to a slowing global demand.