June 23, 2024

Stock markets closed with strong gains a frenetic session on Thursday, marked initially by disappointment at a higher-than-expected US CPI and then by optimism in a scenario where equities are presumed to have bottomed.

The Dow Jones expanded 2.83%, the S&P 500 advanced 2.59% and the Nasdaq Composite grew 2.23%, with which Wall Street broke a losing streak of six consecutive days. In Santiago, the S&P IPSA rose 0.50% to 4,961.09 points.

crossing the Atlantic, the pan-European Stoxx 600 grew 0.85%, the FTSE 100 in London gained 0.35%, the CAC 40 in Paris increased 1.04%, the DAX in Frankfurt added 1.51% and the IBEX 35 in Madrid climbed 1. twenty-one%.

All stock indices saw sharp declines after the inflation data, but these were soon followed by equally strong rebounds. In parallel, the dollar index it fell 0.77% to its lowest levels of the day.

However, US sovereign debt was still in the red. The yield on the 10-year bond rose 6.8 basis points to 3.96%, while the two-year note rose 18.5 bps to 4.47%. The return on a bond is inversely proportional to its price.

In the Asian stock markets, which closed long before the CPI was known, Tokyo’s Nikkei 225 was down 0.60%, Hong Kong’s Hang Seng was down 1.87% and mainland China’s CSI 300 was down 0.84%.

consumer prices

US inflation rose 0.4% MoM and 8.2% YoY in Septemberhigher than the expected 0.2% and 8.1% in the respective comparisons. For its part, the core CPI rose 0.6% month-on-month and 6.6% year-on-year -its highest level in 40 years-when the estimate pointed to 0.4% and 6.5% respectively.

“Despite the report, US equities turned positive as some investors are convinced that core inflation will start to decline soon. Monetary policy is rapidly becoming tighter and that will certainly bring inflation down.” said Oanda Senior Markets Analyst Ed Moya.

“It looks like rates will peak at just over 5%, and for some this is reason enough to get back into equities. Today’s rally was probably also fueled by short hedging, but given the rate is higher, this reversal will not last long,” he added.

The advances in the IPC allowed the market to dispel any doubts regarding a 75 bp hike by the Federal Reserve at their November meeting. According to the CME FedWatch Tool, there is a 99.6% chance of this event occurring.

“We have emerged from the era of financial repression (zero or negative interest rates and asset purchases by central banks) in a few months rather than years, and financial financial assets are once again offering attractive returns on a face-to-face basis.” to the future. We believe that the process of bottoming out for these assets has begun,” he said in his report CIO Monthly Julius Baer investment manager Yves Bonzon.

For their part, applications for unemployment benefits in the US could show that the Fed’s adjustments are having an effect on the labor market. Requests for the first week of October were 228 thousand, slightly higher than forecasts, and mark an advance compared to the 219 thousand of the previous week.

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