Market Wrap – US CPI COMES IN HOT

The United States CPI inflation report came in stronger than expected earlier today, causing stock markets globally to take a notable downturn and for the US dollar to rise.

Notably, the S&P500 crashed towards the 3,500 level and the Nasdaq continued its descent towards the 10,000 level. The DJIA also lost considerable ground.

In Europe, it was more of the same with the UK100 crashing towards the 6,700-support level and the likes of the GER40 and the CAC40 suffering heavy losses.

Breaking down the inflation report, the consumer price inflation in the US eased for a third straight month to 8.2 percent year-on-year in September 2022, the lowest since February but above market expectations of 8.1 percent.

The annual rate remained well above the US Federal Reserve’s target of 2%, suggesting policymakers will maintain their hawkish rhetoric and keep raising interest rates at a quick pace.

Look at category by category, cost increased at a softer pace for both food (11.2 percent vs 11.4 percent in August) and energy (19.8 percent vs 23.8 percent), while the shelter inflation accelerated (6.6 percent vs 6.2 percent).

The US CPI was at 296.808 points in September, compared with 296.171 points in the prior month and market forecasts of 296.43 points.

Another big story was sterling. The British pound continued to rise amidst speculation that the new UK Government are about to make a major U-turn regarding the budget.

The news has also helped stabilize the GILTS markets in the United Kingdom. Most of the selling in sterling recently has been due to the disastrous UK budget.

Other notable market moves included a drop in gold and silver prices and crypto. The price of Bitcoin fell towards the $18,000 level in the aftermath of the CPI report.