U.S. CPI ahead, legal win for Microsoft-Activision deal – what’s moving markets

Investing.com — The release of the June inflation data out of the U.S. is set to be the major focus for markets, with investors hoping to discover any clues about the Fed’s future interest rate path. Elsewhere, Nvidia and Arm reportedly enter talks over the semiconductor giant becoming an anchor investor in the U.K. chip designer’s planned flotation. Meanwhile, Microsoft scores a stunning victory in a U.S. court over its megamerger with “Call of Duty”-maker Activision Blizzard.

1. U.S. CPI looms large

U.S. inflation is expected to have increased at its slowest pace in more than two years in June, but stickiness in so-called “core” prices could still persuade Federal Reserve policymakers to resume its recent campaign of policy tightening.

The Bureau of Labor Statistics’ (CPI) for last month is seen rising by 3.1% annually, down from 4.0% in May. It would be the lowest level since March 2021 and a steep deceleration from the mark of 9.1% last June.

On a , the figure is projected to have moved up by 0.3% from 0.1% in the prior month.

Meanwhile, the uptick in core CPI, which strips out more volatile items like food and energy, is anticipated to have cooled slightly to 5.0% and 0.3% .

Despite the headline number inching ever closer to the Fed’s 2% target, stubborn core readings have fueled speculation that the central bank will raise interest rates later this month after pushing pause on its hiking cycle in June.

2. U.S. futures hold steady

U.S. stock futures broadly hovered around the flatline on Wednesday as investors looked ahead to the release of the all-important inflation numbers.

At 05:17 ET (09:17 GMT), inched up by 48 points or 0.14%, added 8 points or 0.18%, and gained 32 points or 0.21%.

The report, due out at 08:30 ET, will be analyzed closely for any insight into the possible path ahead for Fed policy.

According to Investing.com’s , there is a more than 91% chance that the central bank will roll out a quarter-point increase in interest rates at its July meeting. But it remains uncertain what policymakers will decide to do going forward. The CPI data today, as well as the producer price index on Thursday, could provide some clarity on this crucial question.

3. Nvidia in talks to be anchor investor in Arm IPO – FT

U.K.-based chip designer Arm is reportedly in negotiations to bring in Nvidia (NASDAQ:) as an anchor investor in its planned initial public offering, according to unnamed sources cited by the Financial Times.

Arm hopes that Nvidia, which earlier this year became the first chipmaker to touch a more than $1 trillion valuation, will take a long-term stake at its IPO stage, the people told the FT.

The discussions reportedly center around Arm’s potential valuation. Nvidia wants to come in at a share price that would place Arm’s total value at between $35B to $40B, a source quoted by the FT said. Arm, however, would like the figure to be closer to $80B.

Nvidia’s possible stake could help bolster Arm’s attempt to go public by helping ease any lingering investor concerns.

Regulators in the U.S. have already been contacted by both companies, the FT reported, in a bid to soothe any possible worries. A $66B sale of Arm by Japan’s SoftBank (TYO:) to Nvidia was scrapped last year after regulators in the U.S., U.K. and EU all voiced competition concerns over the deal.

4. Microsoft victorious in U.S. court fight over Activision purchase

Microsoft’s (NASDAQ:) $69 billion megamerger with Activision Blizzard (NASDAQ:) was given a massive boost after a federal court judge rejected U.S. antitrust concerns over the deal on Tuesday.

U.S. District Judge Jacqueline Scott Corley in San Francisco said the Federal Trade Commission, which had requested an injunction to keep the tie-up from closing, did not show that the transaction will “substantially lessen competition” in the video game subscription or cloud gaming markets.

Shares in Activision closed more than 10% higher Tuesday.

Regulators have flagged worries that Microsoft could use the purchase of Activision, the maker of popular title “Call of Duty,” to crowd out competition from the likes of Nintendo (TYO:) and Sony’s (TYO:) PlayStation. The FTC now has until Friday to appeal the decision.

The focus now turns to the U.K.’s antitrust watchdog. Shortly after the U.S. court ruling, Britain’s Competition and Markets Authority (CMA), which formally blocked the merger in April, said it was open to Microsoft modifying the terms of the Activision deal to ease its concerns. The announcement was seen as a suggestion that the CMA’s opposition may be softening.

5. Oil edges higher on demand hopes

Oil prices stabilized Wednesday as predictions of higher demand offset rising U.S. crude stockpiles.

The U.S. Energy Information Administration’s short-term , released on Tuesday, projected that demand would outpace supply by 100,000 barrels a day in 2023 and by 200,000 barrels per day in 2024.

Major oil producers, Saudi Arabia and Russia, have also unveiled additional output reductions for August. Meanwhile, the touched a two-month low, supporting the oil market, with investors betting that the Fed may be approaching the end of its rate-hiking cycle.

But the rally was cooled by data from the American Petroleum Institute, which showed that U.S. crude stockpiles unexpectedly grew by more than 2 million barrels in the week to July 7.

By 05:17 ET, the futures traded 0.27% higher at $75.03 a barrel, while the contract climbed 0.20% to $79.56 a barrel.

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