Markets React to CPI Drop
Global financial markets kicked into action later in the day yesterday as the long-awaited US CPI data at last hit screens. The year-on-year number did print lower than expected and there was a strong knee jerk reaction across products with stocks rallying and the dollar taking a hit, however these moves were quickly reversed as investors looked at the longer-term picture. The major US indices all closed in the black but much lower than the levels they had traded up to, the Dow finishing up 0.15%, the S&P 0.03% and the Nasdaq 0.12%. The dollar recovered swiftly from initial losses and finished up higher against most of the majors with USDJPY noticeably breaking higher to challenge 145.00 level again.
Tale of two CPI’s
Financial markets have now seen two major CPI prints from the worlds two biggest economies and the difference is making interesting reading for many investors. Chinese data confirmed that the economy is facing deflation as it experiences totally different post covid conditions to other economies. Across the big pond, the US numbers indicating that inflation is alive and well, although slowing slightly and Fed expectations have been tweaked accordingly. On the face of it, these data releases came out largely in line with expectations but for the longer-term picture, investors will now be looking for trading opportunities as each of these economies look to battle their way back to normality.
Another Busy Trading Day Ahead into the Weekend
The major data release of the week has come and gone, and the market has experienced the expected volatility, however there is still more to come before traders can put their feet up for the weekend. It’s set to be a relatively quiet day in Asia as the market digests the US session and Japanese investors enjoy a long weekend. However, once Europe opens the focus will move to the UK and the release of the latest GDP data. The US data keeps coming thick and fast, today we have the release of the PPI numbers – expectation for a 0.2% increase for both the headline and Core number, followed by the latest University of Michigan Sentiment print.
