Noor Trends News, Technical Analysis, Educational Tools and Recommendations
The release of the August Consumer Price Index (CPI) in the United States sent a ripple effect through global financial markets. While the headline inflation rate eased slightly, the core CPI, which excludes volatile food and energy prices, remained sticky. This reading has tempered expectations for a bolder ‘50 basis point’ interest rate cut by the Fed at its looming policy meeting.
As a result, stock markets experienced a sharp downturn, with major US indices posting significant losses. However, the market sentiment improved towards the end of the day, with only the Dow Jones Industrial Average remaining in the red territory. US Treasury yields also dipped, reaching new 52-week lows before rebounding slightly.
Currency markets were also impacted. The euro and the British pound appreciated against the US dollar, while commodity-linked currencies like the Australian dollar and Canadian dollar strengthened. The Japanese yen, however, weakened, reaching a new 2024 low. Gold prices initially surged amid risk aversion but later retreated.
Softer CPI: The headline inflation rate in the US eased in August, but core inflation remained persistent.
Market Volatility: Stock markets experienced a significant selloff, but recovered somewhat towards the end of the day.
Currency Movements: The US dollar weakened against major currencies, while commodity-linked currencies and the euro strengthened.
Gold Prices: Gold prices surged initially but later retreated as risk aversion subsided. Spot gold was seen trading %2,511.67 per ounce.
Investors will be closely watching the upcoming monetary policy decisions of the European Central Bank on Thursday, then the rate decision by the Federal Reserve. While the Fed is expected to cut interest rates, the extent of the rate cut will depend on future economic data.
The ECB is also anticipated to ease its monetary policy. Additionally, investors will be monitoring macroeconomic indicators in the US, Europe, and Australia for clues about the global economic outlook.
