Daily Fundamental Analysis: Global stocks under pressure following hot inflation reading from the US
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The market has experienced significant movements in recent weeks – gold at historic highs, high unemployment figures in the US, and a "Black Monday" in the markets due to the uncertainty around an imminent recession in the world's largest economy.
In light of this, positive consumer figures and the increase in retail sales during July, particularly in North America, have dispelled those doubts and infused the market with optimism.
This is reflected in the three main indices, which, despite the sharp declines caused by the "Black Monday" of 5th August, are now in positive territory.
Key indices see recovery
The Dow Jones has risen by 1.39% to date, while the S&P 500 and Nasdaq 100 have also seen significant gains, increasing by 1.61% and 2.46%, respectively.
Meanwhile, Asia’s Nikkei, the main indicator of the Tokyo Stock Exchange, opened today's session with a 2.37% increase.
Conversely, 10-year bond yields have jumped 11 basis points to 3.95%, while the dollar strengthened by 0.60% in today's session, reaching 103.219 points.
But what is the most important takeaway from all these figures? A soft and controlled landing is expected as we approach what could potentially be the first interest rate cut by the Federal Reserve (Fed) in September.
Powell’s comments at Jackson Hole to be closely watched
It is anticipated that all these points will be addressed by Fed Chair Jerome Powell at the annual Jackson Hole Symposium, which gathers the world's leading central bankers and will take place next week (22nd to 24th August 22).
He is also expected to clarify doubts about the two likely scenarios: an aggressive cut of 50 to 75 basis points in September, or staggered cuts of 25 basis points in September, November, and December (and how much these future decisions might be influenced by the upcoming November presidential elections).
The countdown has begun.
