The topic of inflation has been on the markets for a long time, but now it is attracting even more attention due to the base effect - especially in the euro area, where, for example, Germany is breaking new records in price growth.
The eurozone's annual inflation rate rose to 4.1 percent in October 2021 from 3.4 percent in September, a reading above market forecasts of 3.7 percent. - according to preliminary estimates. This is the highest reading since July 2008 as the zone struggles with rising energy costs amid persistent supply shortages of many components and subassemblies. Energy price inflation is expected to have its highest annual rate in October (23.5 percent versus 17.6 percent in September). The monthly rate likely rose to 0.8 percent from 0.5 percent.
Such high inflation readings seem to be changing the attitude of the interest rate market and Christine Lagarde, the head of the European Central Bank, is not able to prevent it either. The eurozone money market now seems to be pricing in two interest rate hikes of 10 basis points each by October 2022. According to the market, there is therefore a chance of 20 points of interest rate hikes within a year. Longer-term inflation expectations, on the other hand, seem to indicate that inflation in the Eurozone will nonetheless remain above 2 percent for an extended period of time.
Disappointment on Wall Street
In addition to the hot topic of inflation, it is also worth looking at the hot earnings season in the United States. Both the S&P 500 and Nasdaq appear to be correcting earlier gains after Apple and Amazon released disappointing results after the previous day's session closed. Apple shares fell more than 3 percent on supply constraints, while Amazon shares fell 4 percent after the company reported EPS below expectations and gave a weak outlook for the fourth quarter. Lower-than-expected revenue dragged Starbucks shares down 4 percent. Meanwhile, Chevron and Colgate-Palmolive shares rose after beating analysts' expectations. The energy company reported higher-than-expected earnings and revenue, while the consumer products maker's profits were squeezed by forecasts of continued high costs. However, October 2021 will still go down in the history of records on Wall Street, where the S&P 500 was trading in the region of 4600 points, the Nasdaq 100 at 15800 and the Dow Jones in the region of 35800 points.
Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service)
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Trade this news from Conotoxia Ltd. platforms
Go to your account
