Higher US PPI data and rising volatility sends a signal that this rally might be living on borrowed time, says Chris Beauchamp, Chief Market Analyst at online trading platform IG.
Rising volatility keeps investors on edge
“The steady rise in the Volatility Index does have some investors worried. Although still subdued compared to 2022, the Vix’s rise since January comes even as stocks hit record highs, but is a sign that trouble might be brewing beneath the surface. Today’s stronger PPI readings in the US couple with the CPI figures earlier in the week to suggest the Fed’s tone next week might not be quite what investors were hoping for.”
Oil price surge adds to inflation worries
“Oil prices have had a choppy time of it lately, but the overall move higher is intact. Ukraine appears to be planning on widening its campaign against Russian oil refineries, which poses supply risks for large parts of the world economy that still take Russian oil. While the price is still far below its 2022 highs, the position of central banks on rate cuts is now finely-balanced, and higher oil prices could easily tip policymakers back towards caution.”
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