Once again fears about high inflation and the prospect of more interest rate hikes in the US are hammering stocks.
By Stuart Cole, Head Macro Economist, Equiti Capital
By Stuart Cole, Head Macro Economist, Equiti Capital
Equity markets are higher across the board as European traders picked up the bullish baton from their counterparts in Asia overnight, and the optimistic mood is doing the rounds in the US too.
Volatility in the markets has drifted lower today as equities are trading within a relatively small range, and the currency market is calmer too. Equity markets in Europe are largely higher this afternoon as the rebound that began on Tuesday is still in play.
Traders are buying back into European equity markets as government bond yields are a little lower. At the start of the week, the US 10-year yield pushed above 1.80%, and that triggered a wave of selling in equities, in particular US stocks.
US inflation figures rose in September to their highest level in eight months, with the consumer price index up by 0.5%, after rising by 0.4% in August. The rise is the largest since January, and the index rose on a yearly basis to 2.2% in September from 1.9% in August.
The weekend saw flaming events as elections were held in New Zealand and Germany, New Zealand's ruling National Party has won the largest number of votes, reaching 46%, while the opposition Labor Party has won 35.8%. The next few days will witness talks in order to form a coalition, to form the new government pending the announcement of the results officially on October 7.
The US consumer price index rose by 0.4% in August compared to expectations of a 0.3% rise. On an annualized basis, the index rose by 1.9% from 1.7% and better than the expectations of 1.8% rise.
The consumer price index rose in July for the seventh month in a row, and the core index maintained its rising on a steadily upward path. A sign that the third largest economy in the world recovering. With the core CPI rising, excluding fresh food prices by 0.5% on yearly basis in July.
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