- Futures point to a modest recovery, after Tuesday’s plunge.
- The dollar corrects lower before another important data on US inflation.
- Bonds are stable, and metals trim losses.
After Tuesday’s crash, Wall Street futures point to a positive open on Wednesday. Financial markets reverse a small part of Tuesday’s rallies, with the dollar falling slightly, metals rebounding and bonds trading flat. Wholesale inflation data for August from the US is coming.
The storm passed, the clouds continue
On Tuesday, Stocks in the US had the worst day since June 2020, given the expectation of more monetary tightening by the Federal Reserve after the US inflation figure for August. The Dow Jones lost almost 1,300 points, the S&P 500 more than 4% and the Nasdaq 5.15%. In the preview the S&P 500 is up 0.35%, as is the Nasdaq.
In Asia, markets fell sharply in line with what happened yesterday on Wall Street, with the Asia Dow losing 2.25%. In Europe on Wednesday the FTSE 100 fell 0.98%, the DAX fell 0.49% and the CAC 40 lost 0.25%. The IBEX 35 manages to rise 0.42%.
The data that triggered the sharp falls in the equity markets was the rise of 0.1% in August of the Consumer Price Index in August in the US, the underlying rose 0.6%. The indicators were higher than expected and did not give the expected signals that a peak had been reached.
Treasuries plunged and are trading flat on Wednesday with yields near their highest in months or years. In case of resumption of the rise, the dollar could be favored again. On Wednesday a key event will be the wholesale inflation report. The Producer Price Index is expected to register a drop of 0.1% in August and the annual rate to go from 9.8% to 8.8%.
In the United Kingdom Inflation figures for August were released, which were lower than expected. The annual rate of the CPI went from 10.1% to 9.9%. Despite this, the Bank of England is still expected to raise the reference interest rate next week by 50 basis points (it is not ruled out that it will be 75 points). The European Central Bank is estimated to rise again by 75 basis points in October.
Despite speculation about these central bank interest rate hikes, the pace of the Fed is still expected to be faster, which continues to provide strong support to the dollar. The Dollar Index (DXY) falls 0.40% on Wednesday after rising sharply on Tuesday and posting the second highest daily close in decades.
EUR/USD is testing levels above parity and GBP/USD above 1.1650 after Tuesday’s crashes. USD/JPY falls and is close to 143.00, after the Bank of Japan “revised exchange rates” when the pair was nearing 145.00 (talk about possible intervention). Emerging market currencies are also recovering after the sharp decline.
Tuesday’s correction moves also include metals. Gold rose modestly and climbed to $1705 while silver hit daily highs above $19.50. The cryptocurrencies stabilize after the dark day on Tuesday, in which the Bitcoin lost more than $2,000. BTC/USD is at $20,350, after managing to hold above $20,000.
The prices of Petroleum They trade without significant changes on Wednesday. The barrel of WTI is at $87.30, and remains far from the lows of last week.
In Europe, the president of the European Commission, Ursula von der Leyen, presented an intervention plan in the electricity market, which includes taxes on the utilities of energy companies and consumption reduction goals for both families and companies.
The actions of Twitter They rose 0.80% on Tuesday and in the previous one they fell 1.08% after the approval of the shareholders in favor of the purchase offer of Elon Musk of 44,000 million dollars. Among the companies reporting results on Wednesday are Logitech and Growthpoint Properties.
Technical levels
Source: Fx Street
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