Stocks wobble as US PPI comes in hotte

Chris Beauchamp IG

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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Chris Beauchamp

EUR/USD faces next resistance near 1.1930

EUR/USD continues to build on its recovery in the latter part of Wednesday’s session, with upside momentum accelerating as the pair retargets the key 1.1900 barrier amid a further loss of traction in the US Dollar. Attention now shifts squarely to the US data docket, with labour market figures and the always influential CPI releases due on Thursday and Friday, respectively.

GBP/USD sticks to the bullish tone near 1.3660

GBP/USD maintains its solid performance on Wednesday, hovering around the 1.3660 zone as the Greenback surrenders its post-NFP bounce. Cable, in the meantime, should now shift its attention to key UK data due on Thursday, including preliminary GDP gauges.

Gold holds on to higher ground ahead of the next catalyst

Gold keeps the bid tone well in place on Wednesday, retargeting the $5,100 zone per troy ounce on the back of modest losses in the US Dollar and despite firm US Treasury yields across the curve. Moving forward, the yellow metal’s next test will come from the release of US CPI figures on Friday.