It is looking like another gloomy afternoon for stock markets, with today’s US inflation figure offering little comfort to investors, says Chris Beauchamp, Chief Market Analyst at online trading platform IG.
Stocks mixed in wake of US inflation
“Traders were distinctly unimpressed by today’s inflation report in the US, which failed to energise markets that are nervously awaiting next week’s Fed rate cut. It seems like every major event that might settle the issue of a 25 or 50bps cut turns out to be a damp squib, though the likelihood of a 50bps move does continue to recede. But with oil prices and other commodities having fallen sharply over the past week, there are real worries that sustained economic weakness is around the corner.”
Trump vs Harris – Much heat but little light
“Given the focus on the Fed, the US election has taken something of a back seat. A dismal Harris performance might have put Trump firmly back in the driving seat, but it still seems impossible to for either candidate to edge firmly into the lead. Such uncertainty is just one more thing to keep investors in check at present.”
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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