Spreadex Market Update
Tuesday afternoon disappoints, eyes turn to Wednesday’s US inflation data/Bundestag vote
That could all change on Wednesday, however; with just less than a month to go until the Federal Open Market Committee’s potentially decisive September meeting every piece of interest rate relevant number is a possible major market mover. And if the UK’s inflation figure this morning was of interest to investors, then tomorrow’s US figure should, in theory, be the week’s defining piece of data.
Comments from Stanley Fischer and Dennis Lockhart suggest that it is now inflation, not jobs, that is the most prominent concern for the Fed, and if analysts are correct then the central bank won’t be too pleased with Wednesday’s figure. Both CPI and core CPI are expected at 0.2% month on month, a decline for the former and stagnation for the latter. If the US sees a positive surprise like the UK did this morning, then the dollar could surge like sterling; anything lower than forecast and the Dow could get a boost. Either way the impending inflation figure, alongside a disappointing quarter for Wal-Mart and fears over China, seems to be spoiling investors’ appetite for risk, leaving the Dow flat(ish) after the bell.
The commodity situation only worsened as the day went on, with copper especially taking a beating; obviously this left the FTSE in the red, even if it managed to mitigate its more excessive losses after the US open. Wednesday sees another data-lacking day for the FTSE, leaving it extra-susceptible to any overnight movements from China and the commodities.
The DAX and CAC couldn’t escape their lunchtime losses, despite continued positive progress for the third bailout. The region has no data to offer tomorrow, but could still see some fireworks dependant on the size of the CDU/CSU rebellion during the Bundestag vote on the latest Greek deal. Anywhere between 65 and 120 ‘no’ votes are expected from Merkel’s party; not enough to derail the deal, but enough to make the German Chancellor’s life uncomfortable going forward.
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