US PPI and Oracle: What to Expect from the Market This Thursday

Wall Street futures are mostly up this Thursday, but the session is far from trivial. Two events are capturing investors' attention: the release of the Producer Price Index (PPI) for August in the United States and Oracle's quarterly earnings report, expected after the market closes. Together, they could recalibrate bets on US interest rates and the investment cycle in artificial intelligence.

The PPI is the last relevant inflation data before the next Federal Reserve meeting. Consumer Price Index (CPI) numbers have already been released. Now, the market wants to know if the pressure on production costs confirms the trend of slowing inflation or if there is some hidden rebound in the production chain.

Why the PPI Matters More Than It Seems

The Producer Price Index measures the variation in costs at the industrial and service level before they reach the final consumer. When the PPI rises, it indicates that inflationary pressure is forming. When it falls or slows down, the Fed gains comfort to maintain or reduce interest rates.

In recent months, the PPI has shown a benign trajectory, reinforcing the scenario that the tightening cycle is behind us. However, any upside surprise could quickly change the mood, especially at a time when interest rate futures contracts are already pricing in cuts in the short term. As we analyzed in our monetary policy coverage, the differential in expectations between what the market anticipates and what the Fed signals has been a constant source of volatility.

In addition to the PPI, two other indicators will be released this morning: weekly unemployment claims and August existing home sales. The first is an almost real-time thermometer of the American labor market. The second reflects the impact of high mortgage rates on the housing sector, one of the most sensitive to interest rates in the United States.

Oracle and the Reality Check for AI

On the corporate side, Oracle will report its quarterly results after the closing bell. The company has become a central player in the cloud computing infrastructure aimed at artificial intelligence, competing with Amazon Web Services, Microsoft Azure, and Google Cloud.

Oracle's earnings report serves as a kind of litmus test. The thesis that demand for AI infrastructure continues to grow at a rapid pace depends on concrete numbers. Cloud revenue, operating margin, and, most importantly, guidance for the upcoming quarters are the points the market will dissect line by line.

If the numbers come in strong, they reinforce the narrative that the investment cycle in AI is far from slowing down. If they disappoint, they could weigh on the entire tech sector, which is already facing stretched valuations. The performance of big techs and appetite for AI have been recurring themes in BlockTrends' technology section, and Oracle's results provide another layer of data for this analysis.

Europe Awaits the ECB and Asia Lacks Clear Direction

In Europe, markets are operating without a clear direction ahead of the European Central Bank's interest rate decision. An increase is already priced in, so the real focus is on signals about the next steps. The eurozone faces a dilemma: service inflation remains resilient, but economic activity, especially in Germany, shows signs of weakness. Any more dovish tone from the ECB could weaken the euro and affect flows to emerging markets.

In Asia, the session ended without consensus. In Japan, the Nikkei 225 rose 0.2%, closing at 65,270 points, while the Topix index followed with a similar increase. In South Korea, the Kospi fell 0.25%, but the Kosdaq, which includes smaller companies, rose 0.79%.

The negative highlight was China. Hong Kong's Hang Seng fell 1.23% in the last hour of trading, and the continental CSI 300 dropped 0.53% to 4,548 points. Iron ore in China fell for the second consecutive session, reaching its lowest price in nearly a week. The reason: profit margins in the Chinese steel sector continue to be compressed, reducing demand for raw materials. For those tracking commodities and their reflections in Brazil, this dynamic is relevant. The portal's commodities coverage has already highlighted how the performance of iron ore in China directly affects the Brazilian stock market.

Oil Prices Rise Amid Middle East Tensions

Oil prices are rising after Iran declared it is prepared for military escalation amid increasing hostilities in the Middle East. The market's fear is clear: any disruption in the Strait of Hormuz, through which about 20% of the world's oil is consumed, could create a supply shock.

The combination of geopolitical tension with inflation data creates a scenario of heightened uncertainty. If oil continues to rise, it could pressure the CPI and PPI in the coming months, complicating the Fed's work even if August's data comes in positive.

What Investors Should Monitor

This Thursday's agenda is one of those that define narratives for the coming weeks. The PPI calibrates expectations about the Fed. Oracle tests the sustainability of the AI cycle. The ECB signals the European monetary direction. And oil adds a layer of geopolitical risk that cannot be ignored.

For Brazilian investors, the developments are direct. A Fed more inclined to cut rates tends to weaken the dollar and benefit risk assets in emerging markets. Strong results from Oracle could sustain the tech rally. And higher oil prices pressure domestic inflation but benefit Petrobras and royalty revenues. The question, as always, is the combination of these vectors and the magnitude of each.