By JustForex
The US consumer price Index rose by 0.4% last month, but in annual terms, the Index declined from 8.3% to 8.2%. Core inflation, which excludes food and energy prices, rose by 0.6% last month, and in annual terms, the core Index increased from 6.3% to 6.6%, the highest level since 1982. So overall inflation has shown signs of declining, while core inflation has shown signs of accelerating. The inflation data would likely perpetuate an additional 75 basis point interest rate hike at the November FOMC meeting and spurred speculation of a fifth consecutive increase of the same size in December. On the other hand, this scenario was initially planned by the experts, which is why the stock market reacted positively to this news. However, it should be noted that when the news was published, the indices fell sharply, but by the end of the trading session they recovered. At the close of the stock market yesterday, the Dow Jones Index (US30) gained 2.83%, and the S&P500 Index (US500) added 2.83%. The NASDAQ Technology Index (US100) jumped by 2.23% yesterday.
Leading economist David Rosenberg predicts that US inflation will fall below 3% next year and warns that a Fed rate hike is fraught with disaster. According to Rosenberg, the Fed is fighting inflation too hard as price pressures wane. The Rosenberg Research founder noted that the Fed is rapidly raising interest rates and cutting its balance sheet even though stocks are in a bear market and the macroeconomic outlook is extremely unclear. Meanwhile, the yield curve is inverted, a sure sign of an approaching recession. Rosenberg warned that if the Fed continues to tighten its monetary policy, it could lead to lower home prices and cause a credit crunch in the banking sector. It could also weaken consumer confidence and spending and prolong the economic downturn.
European stocks closed yesterday in positive territory. Germany’s DAX (DE30) gained 1.51%, France’s CAC 40 (FR40) increased by 1.04%, Spain’s IBEX 35 (ES35) jumped by 1.21%, Britain’s FTSE 100 (UK100) closed at 0.35% yesterday.
Germany’s consumer price Index rose from 7.9% to a record 10% on an annual basis. Huge increases in energy prices are still the main reason for high inflation. In addition to increases in all energy prices due to the war and crisis, the inflation rate was affected by supply disruptions and significant price increases in the preceding stages of the economic process. As a consequence, the prices of other goods and services, including many food products, also rose. Analysts predict that Germany will slide into recession in 2023. “We are currently experiencing a serious energy crisis that threatens to turn into an economic and social crisis,” German Economy Minister Robert Habeck warned in presenting the official fall economic forecasts. France and Spain will release inflation data today.
The Parliamentary Assembly of the Council of Europe (PACE) recognized the Russian regime as a terrorist. 99 out of 100 delegates voted in favor. The Council of Europe resolution also said that an international tribunal should be created as soon as possible, Russia’s tenure in the UN Security Council is illegitimate, and Ukraine should be given modern air defense systems to protect civilians. International norms now define Putin’s regime as a terrorist, i.e. criminal.
Asian markets mostly traded lower yesterday. Japan’s Nikkei 225 (JP225) lost 0.60% over the day, Hong Kong’s Hang Seng (HK50) ended yesterday down 1.87%, and Australia’s S&P/ASX 200 (AU200) closed yesterday down 0.07%.
Inflation in China rose to its highest level since April 2020 as stimulus measures and holiday spending drove prices higher. The consumer price index rose from 2.5 to 2.8% year-over-year in September. But PPI inflation, which measures inflation among businesses, declined in September, reflecting the continued weakness of China’s manufacturing sector, hit by COVID, this year. This Sunday will be the 20th Congress of the Chinese Communist Party, which is expected to provide insight into China’s economic policy over the next five years. Beijing has pledged to increase stimulus measures to support the economic slowdown. But the country also has to balance adopting supportive measures without harming the yuan.
S&P 500 (F) (US500) 3,669.91 +92.88 (+2.60%)
Dow Jones (US30) 30,038.72 +827.87 (+2.83%)
DAX (DE40) 12,355.58 +183.32 (+1.51%)
FTSE 100 (UK100) 6,850.27 +24.12 (+0.35%)
USD Index 112.47 -0.85 (-0.75%)
Important events for today:
- – China Consumer Price Index (m/m) at 04:30 (GMT+3);
- – China Producer Price Index (m/m) at 04:30 (GMT+3);
- – Canada Wholesale Sales (m/m) at 15:30 (GMT+3);
- – US Retail Sales (m/m) at 15:30 (GMT+3);
- – US Michigan Consumer Sentiment (m/m) at 17:00 (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.
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