Summary:
- US Stocks add to recent recovery
- What does the latest inflation figures mean for the markets?
- Industrial production M/M unexpectedly falls into negative territory
- ZAR surges as Zuma steps down
- Bitcoin breaks back above $9k
The strong recovery seen following a swoon after Wednesday’s US data release has gained traction today with the US500 firmly higher ahead of the cash open. The market fell 50 points in just a matter of minutes following the CPI beat yesterday to 2627 but it recovered well to end the day higher. After ending the US session at 2699 price has made more headway today and posted a new high at 2720. Whilst it is not as widely followed today saw the release of the US PPI figures and these also came in better than expected.
Inflation is now the main theme in the United States. Following years of economic recovery there’s a growing confidence that the US consumer is finally able to produce some price pressure, actually enough of it to warrant monetary tightening. We analyse the report and take a look at 3 relevant markets: US500, EURUSD and Gold here.
This afternoon has seen more bad news for the world’s largest economy with the latest industrial production figures showing an unexpected decline. In M/M terms the reading was -0.1% against consensus forecasts for a 0.2% increase after the prior reading showed 0.4% (revised lower from 0.9%). Industrial production has been diverging from the ISM manufacturing reading for a while now and this could be seen to suggest that there might be some weakness in the ISM going forward.
The South African rand gained momentum on Wednesday evening after Zuma’s resignation from his presidential post which, however, was broadly expected for a long time. Needless to say that ZAR’s strength is being fuelled by US dollar weakness alike but the end of the nine-year long scandal in South Africa suggest that declines in the USDZAR could even accelerate from the current levels.
Bitcoin accelerated its uptrend during the yesterday’s session as it managed to break above a $9k mark climbing the highest level this month. Let us recall that we pointed out such a scenario on Wednesday when we referred to blockchain talks in the US House of Representatives. At the time of writing Bitcoin is nearing a round psychological level at $10k which could constitute a major obstacle for bulls and they could struggle to break it at the first time.