Post-inflation relief supports risk appetite

In-line inflation figures have kept stocks on an even keel and given gold a boost, says Chris Beauchamp, Chief Market Analyst at online trading and investing platform IG.

Equities hold the line after inflation data

Stock markets haven’t exactly raced away in the wake of the CPI figures, but it has at least meant they have swerved a nasty afternoon of selling. A hot CPI, combined with thinner August liquidity and a still skittish investor mindset, could have seen the beginnings of a rout. That has been avoided for now, and while a September rate hike looks less likely than it did a few hours ago, the ongoing hawkish views of much of the FOMC means a rebellion against the new chairman and against the president still cannot be ruled out.

Dollar steady but precious metals still rally

The recovery in the dollar off last week’s lows is not done yet, another sign that the rate hike idea hasn’t gone away entirely. But gold and silver are still in the midst of a recovery, which is bound to draw in more flows, like bees to a honeypot. This is likely to be bad news for bitcoin, which has once more shied away from $65,000, hurt by the more impressive strength in gold and silver.