Yesterday, the US indices were trading in a narrow price range. This is not surprising as no one wants to take additional risk, and everyone was braced for the consumer price index data, which is an indicator of inflation. The US economists expect inflation to rise 0.4% in monthly terms and up to 4.8% annually. Core inflation is expected to be 3.4%. If the report turns out to be worse than those expectations, the market may react very negatively as investors will start to close their positions with the fears that the Fed will start to cut its stimulus measures earlier.
European indices were slightly lower on Wednesday. Today, the ECB will report on its interest rate. The European Central Bank does not plan to change its program of massive economic stimulation in the near future, so all attention of European investors is focused on inflation data from the US.
Inflation data will also influence gold prices. Rising inflation will push gold higher, while declining inflation may cause sales in precious metals. But investors should not expect a downtrend on gold as the US Treasury yield fell below 1.5%, and the gold has an inverse correlation to that indicator.
Crude oil inventory data showed weaker-than-expected demand for the fuel at the beginning of the peak summer season. Crude oil futures decreased by 0.8% on Wednesday. In India, the world’s third-largest oil consumer, fuel demand fell to its lowest level since last August in May.
Asian stock indices rose slightly on Wednesday but still trade in narrow ranges as investors await the US inflation data. Japan’s Nikkei and Australia’s ASX indices increased by 0.4% each. China’s blue-chip index CSI300 jumped by 0.9%. The Asian market is highly correlated with the US market now.
Main market quotes:
- S&P 500 (F) 4,219.55 -7.71 (+0.18%)
- Dow Jones 34,447.14 -152.68 (-0.44%)
- DAX 15,581.14 -59.46 (-0.38%)
- FTSE 100 7,081.01 -14.08 (-0.20%)
- USD Index 90.15 +0.07 (+0.08%)
Important events:
- Australia MI Inflation Expectations (m/m) at 04:00 (GMT+3);
- ECB Interest Rate Decision (m/m) at 14:45 (GMT+3);
- ECB Monetary Policy Statement (m/m) at 14:45 (GMT+3);
- ECB Press Conference at 15:30 (GMT+3);
- US Consumer Price Index (m/m) at 15:30 (GMT+3);
- US Core CPI (m/m) at 15:30 (GMT+3);
- US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
- Natural Gas Storage (w/w) at 17:30 (GMT+3);
- US 30-y Bond Auction at 20:01 (GMT+3).
