Global Stocks Face Volatility Test as US, China Inflation Data and SpaceX IPO Loom

CPI, Xi-Kim summit among this week's key market drivers

Focus also on whether China can shake off deflation pressure

Wall Street is bracing for sharp swings in the week of June 8-12 as investors await a string of major events, including SpaceX's market debut and fresh US inflation data.

The first major test comes on June 10 with the release of the May consumer price index. Market participants expect headline CPI to have risen 0.5% from the previous month. Core CPI, which excludes volatile food and energy prices, is projected to increase 0.3%.

From a year earlier, headline CPI is forecast to rise 4.2%, while core CPI is seen at 2.9%.

The May producer price index follows on June 11. PPI, a measure of wholesale inflation, is a leading indicator for CPI. Investors are watching the report for clues on future price pressures.

Components in the PPI report, including portfolio management fees, airfares and hospital costs, also feed into the personal consumption expenditures price index, the inflation gauge favored by the Federal Reserve. Market participants expect PPI to rise 0.8% from a month earlier.

On June 12, the University of Michigan will release June inflation expectations. The focus is on whether consumers still expect prices to rise sharply in the months ahead.

Beyond the economic calendar, several major events are also in focus. They include US-Iran negotiations on a war-ending agreement and SpaceX's New York market debut on June 12. SpaceX plans to raise $75 billion through its initial public offering, giving it an implied valuation of $1.77 trillion.

Because one factor behind last week's slump in technology stocks was demand for cash to buy into SpaceX, funding-market flows will also be closely watched.

Caution ahead of next week's Federal Open Market Committee meeting is also set to shape sentiment. Fed officials are entering the blackout period before the June 16-17 FOMC meeting, refraining from public comments on monetary policy.

In Shanghai, investors are watching a summit between Chinese President Xi Jinping and North Korean leader Kim Jong Un. Xi's state visit to North Korea on June 8-9 could influence markets depending on the scope of economic cooperation he signals and the tone of his remarks.

China's May import and export data due on June 9 and May CPI due on June 10 are also key variables. China's CPI rose 1.2% in April from a year earlier, beating market expectations. It is projected to remain in the low-1% range in May. If that trend continues, easing deflation concerns could support consumer stocks.

Kim Eun-jung, Beijing correspondent, Korea Economic Daily, kej@hankyung.com