The stock market is falling amid a sharp acceleration of inflation

by JustForex

On Wednesday, the main U.S. stock indices showed negative dynamics again. Data from the Labor Department showed that consumer prices in the U.S. almost tripled. This is the highest level for the last 12 years. And the Core PPI index (excluding food and energy prices) rose to a level that was last seen in 1982. There is no doubt that all this will most likely lead to a tightening of monetary policy from the Fed. First of all, the interest rate may be raised by at least 0.25%.

European stock indices rose slightly on Wednesday due to the growth of shares of mining, oil and banking companies. German DAX added 0.2%, while British FTSE increased by 0.82%.

The oil market continues to rise. On Wednesday, the price of oil reached its highest level in the last 2 months. Crude oil inventory data showed a result that is 5 times lower than expected, so taking into account the current demand, prices may still rise.

Gold prices, which have an inverse correlation with the dollar index, decreased by -0.11% due to the unexpected rise in the dollar index. As a rule, when inflation goes up, gold prices go up too, but investors should also take into account the treasury bond yields, which remained at the same level.

The Asian stock market followed the U.S. market. Asian stocks fell to a seven-week low. Japan’s Nikkei index decreased by 2.0% to its lowest level since early January and Chinese blue chips lost 0.9%.

Main market quotes:

S&P 500 (F) 4,063.04 -89.06 (-2.14%)

Dow Jones 33,587.66 -681.50 (-1.99%)

DAX 15,150.22 +30.47 (+0.20%)

FTSE 100 7,004.63 +56.64 (+0.82%)

USD Index 90.77 +0.64 (+0.71%)

• – US Unemployment Claims (w/w) at 15:30 (GMT+3);
• – Natural Gas Storage (w/w) at 17:30 (GMT+3);
• – Canada BOC Governor Tiff Macklem Speaks at 18:00 (GMT+3);
• – UK BOE Governor Andrew Bailey Speaks at 19:00 (GMT+3);
• – US 30-y Bond Auction (m/m) at 20:01 (GMT+3).

by JustForex

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.