Spreadex Market Update
Eurozone Inflation Hits All Time High
Inflation is back in focus this week with yesterday’s data showing that Eurozone CPI hit its highest level on record last month at 10.7% on the headline figure. This marked a stark jump from the prior month’s 9.9% reading and also came in above the 10.2% figure the market was looking for. Core inflation was also seen rising again, moving up to 5% from the prior month’s 4.6% reading.
On the back of the data, ECB chief Lagarde warned that further rate hikes would be necessary adding that the ECB’s rate-tightening peak must ensure inflation returns to the bank’s 2% target. Lagarde echoed previous comments as she blamed the scourge of inflation on Putin’s war in Ukraine.
Key Factors for Today
- USD softens ahead of FOMC tomorrow – ISM manufacturing up next today
- Equities improve amidst weaker USD – US earnings season continues
- RBA hikes by just 25bps, signals more to come
- Commodity currencies rallying on USD weakness
- Metals and oil higher amidst softer USD
Coming Up
- GBP UK Final manufacturing PMI
- USD US ISM Manufacturing
- USD US JOLTS Job openings
Equities Bolstered by Softer US Dollar
Equities prices appear to be in typical pre-FOMC holding mode. The rise in the US Dollar yesterday leaned on risk sentiment across the board, dampening stock prices. However, a softer start for the Dollar today is allowing equities better demand. However, not expecting anything meaningful, direction wise, until the FOMC tomorrow with indices broadly expected to keep trading water until then.
Arista Networks Beats Forecasts
US earnings season rolls on today with the focus on Airbnb, Uber and Pfizer among other. Yesterday cloud company Arista Networks kicked the week off on a positive note, reporting better than expected results for Q3. Arista posted EPS of $1.25 vs $1.04 expected on revenues of $1.17 billion vs $1.06 billion expected.
USD Weaker – Commodity Currencies Rallying
In FX, a softer start for the US Dollar today is leading to more balanced action across early European trading today. NZD and CAD have taken the lead as the best performers, boosted by higher commodities prices so far today, while GBP is under most pressure as political uncertainty continues to hit sentiment in the UK.
RBA Hikes by A Smaller Amount Again
The RBA was seen hiking rates again overnight though this time by just 25bps, a further reduction from the prior month’s 35bps increase. While RBA governor Lowe advised that further hikes will likely be necessary as the fight to contain inflation continues, he also expressed a need to balance tightening with the risk to the economy so as to minimise the harsher effects. These concerns were reflected in the downward revisions to the bank’s GDP forecasts.
Metals & Oil Turning Higher Amidst Weaker USD
In the metals and commodities space, both gold and silver have moved sharply higher today, benefiting from the weakness in USD. Silver prices are now testing last week’s highs, helped also by the lift in equities prices today. Crude oil is also advancing though flows remain more constrained for now with futures prices still within yesterday’s range.
It's easy to open an account
- Fill in our simple online application form
- Fund your account
- Start trading the global markets instantly!
SEARCH FOR AN ARTICLE:
Enter a keyword and search for all relevant articlesMARKET ANALYSIS
RECENT POSTS
DISCLAIMER
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64% of retail investors lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money. For professional clients, spread betting and CFD trading can also result in losses larger than your initial stake or deposit.
Spreadex Ltd is authorised and regulated by the Financial Conduct Authority, provides an execution only service and does not provide advice in any way. Nothing within this update should be deemed to constitute the provision of investment advice, recommendations, any other professional advice in any way, or a record of our trading prices. This update does not constitute or form part of an offer of, or solicitation for a transaction in any financial instrument, nor shall it or the fact of its distribution form the basis of, or be relied on in connection with, any contract therefore. Any persons placing trades based on their interpretation of the comments or information within this update does so entirely at their own risk.
No representation, warranty, or undertaking, express or limited, is given as to the accuracy or completeness of the information or opinions contained within this update by Spreadex Ltd or any of its employees and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions. As such, no reliance may be placed for any purpose on the information and opinions contained within this update.
The information contained within this update is the intellectual property of Spreadex Ltd and is protected by UK and International copyright laws. All rights reserved. Users may however freely download, distribute and reproduce extracts of the contents, subject always to accrediting Spreadex Ltd as the source and providing a hyperlink to www.spreadex.com.
