Markets Mixed After US CPI in Line With Expectations

  • Market Overview

Markets were mixed on Tuesday after the latest data showed that inflation in the largest economy in the world, the US, decreased to the lowest level in five months, while core inflation remained the same as the level recorded in October. Data showed that the annual inflation rate in the US slowed to “3.10% in November 2023, from 3.20% in October and in line with market forecasts, (while) the annual core inflation rate, which excludes volatile items such as food and energy, remained unchanged from the 4% seen in October, matching market forecasts,” Trading Economics added. This increased bets that the US Federal Reserve (Fed) could keep interest rates higher for longer at their meeting scheduled for later tonight.

The local bourse closed down by 1.70% yesterday after the release of the latest US inflation data, with most investors waiting for the latest local inflation data, expected this morning, for indications of whether monetary policy tightening by the South African Reserve Bank (SARB) is yielding any results on dampening local inflation levels. The latest data also showed that local mining and manufacturing production exceeded expectations.

European markets closed down on Tuesday as investors waited to see what decisions the European Central Bank ( ECB ) could take regarding interest rates on the continent. In contrast, markets in the US traded higher at 20h30, despite the latest US inflation data coming in as expected.

The Hang Seng closed up by 1.07% yesterday after an “upbeat (mood among investors) as they awaited decisions from a gathering of policymakers in China that could reveal a more proactive role for fiscal policy next year, including more front-loading of funding and strengthening implementation to improve economic policies,” added Trading Economics.

Comments from Bank of Japan officials, saying they “don't feel compelled to swiftly implement policy tightening unless there's substantial evidence of wage growth capable of backing sustainable inflation”, supported the Nikkei on Tuesday which closed up by 0.16%.

Gold traded at $1 979 an ounce at 21h00, while Brent crude traded hands at $72.95 a barrel at the same time.

PSG Wealth Daily Investment Update, 13 December 2023

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