Markets Lower Ahead of US CPI Data Release

The S&P 500 and Nasdaq each dropped approximately 0.30%, while the Dow Jones fell by 154 points on Tuesday. Investors were cautious ahead of today's much-anticipated consumer inflation report, which could significantly influence Federal Reserve (Fed) policy. Despite the market downturn, indices remained near record highs, buoyed by optimism that the inflation data might confirm expectations of a "soft landing" and lead to a Fed rate cut this month.

The rand ended a three-day winning streak on Tuesday but remained steady below the R18/$ mark. The local stock market also experienced a downturn, falling 0.42% to close at 87 271. In economic releases, Stats SA reported that local manufacturing production increased by 0.80% y/y in October, reversing the 0.80% decline recorded in September and ending a two-month trend of weak output. Manufacturing is crucial for the economy, generating billions in export revenue, contributing around 13% to GDP, and creating jobs.

The Hang Seng index fell 0.50% on Tuesday, reversing a morning surge due to profit-taking after reaching its highest point in a month following Monday's pledge from the Chinese Politburo to increase stimulus next year. Markets closed lower for the first time in three sessions as new data showed a sharp decline in Chinese export growth in November while imports further declined. Meanwhile, the Nikkei rose 0.53%, extending gains from the previous session, driven by optimism after China announced "more proactive" fiscal measures and a "moderately" looser monetary policy, boosting market sentiment across the region.

In Europe, markets ended an eight-day rally, with the STOXX 50 down 0.70% and the STOXX 600 declining 0.50%, led by a 1.10% drop in industrial stocks. Weaker-than-expected Chinese import and export data pushed mining stocks 0.80% lower, while traders awaited US inflation data to be released later today.

Brent crude oil futures eased to around $71.80 per barrel on Tuesday as concerns about the collapse of the Syrian government subsided, though the market found support from China's promise to increase policy stimulus. Gold climbed above $2 660 per ounce, rising for the second consecutive session, supported by China’s policy shift and geopolitical risks in the Middle East.




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