Markets Mixed on Eve of Key US Inflation Data

  • Market Overview

Markets were mixed on Wednesday as investors focused their attention on the results of the US midterm elections and today’s US inflation report. At 18h00 the Dow fell nearly 500 points, the S&P 500 slipped 1.40%, and the Nasdaq tumbled 1.80% on ambiguity about the overall result of the midterm elections. Early indications showed a closer-than-expected race between Democrats and Republicans, with the latter still maintaining control of the US House of Representatives, while the Senate is still up for grabs. Investors are also looking forward to the October 2022 inflation data report, due later today, for clues on how far the US central bank will tighten financial conditions to tame inflation.

Markets in Europe struggled for traction on Wednesday with all major indices closing slightly lower. The continent’s Stoxx 600 , Germany’s DAX and the FTSE 100 were all pulled down by retreats in tourism and leisure counters.

Chinese markets also fell with Hong Kong’s main index losing 1.37% amid mounting fears that China might face more deflationary pressure due to weak demand. On the data front, producer prices fell to -1.30% in October 2022 from 0.90% previously. Moreover, China’s inflation rate eased to 2.10% y/y in October 2022 from 2.80% recorded in the previous month and below market expectations of 2.40%. Japan's Nikkei fell 0.56% tracking weaker US markets.

However, the local bourse reversed the previous day’s losses on Wednesday driven by precious metals counters. Gold Fields (JO: GFIJ ) significantly outperformed after rising 21% on the day. Meanwhile, the local power utility extended stage 2 load shedding after another power station broke down. However, the rand firmed at 18h15 local time, trading at $17.60 to the US dollar.

In commodities, Brent crude traded lower on Wednesday, hovering below the $95 mark, while gold was flat at $1 712 an ounce at 18h40 local time, pulled down by demand concerns as Covid-19 cases increased in China.

PSG Wealth Daily Investment Update, 10 November 2022

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