After a quiet start to the week, there was an important CPI report from the U.S. yesterday, albeit very unspectacular, and today more important U.S. data (PPI, retail sales) and the most important event of the day – the ECB interest rate decision.
Inflation concerns did not worsen after yesterday's CPI data in the US, although both headline inflation (only very slightly) and core inflation came in slightly higher than expected. However, the big shock that the rise in oil and fuel prices could have had on prices did not materialize.
Eurozone inflation is more problematic, however, as Europe is more dependent on energy imports. We see European markets struggling for direction ahead of the interest rate decision in a few minutes after the press conference at 12:45 UTC+0.
The majority of analysts (~64%) expect the ECB to hike rates by another 25 basis points. Of course, we have to acknowledge that markets have raised expectations for further rate hikes and high interest rates for an extended period of time in recent weeks. I would recommend that the ECB raise rates today – especially given the continued deterioration in economic data in the coming months, which will only make it more difficult to raise rates later this year. But even if the ECB doesn't raise rates, it won't provide the dovish outlook investors are hoping for.
The focus today will also be on Arm's IPO. The chip designer's IPO was more than 10 times oversubscribed, so the price of $51 per share was the high end of the price range.
We see higher oil and natural gas prices today (especially LNG / European gas), which will continue to weigh on Eurozone stocks, but U.S. investors seem more upbeat overall after recent inflation data was not as bad as many had feared.
Further Chinese stimulus is supporting Asian equities, but the main driver in the US is expectations that the Fed has already reached the end of its tightening campaign. I share this view, but still expect a slowdown in the US economy before we are likely to see a strong recovery in H2/2024. However, the big crash in US equities is unlikely to come – I'm rather optimistic about that.
👁 ROB'S MARKET OVERVIEW:
September 14, 2023
⚠️ We expect the ECB to NOT deliver a dovish stance – which would support short-term the EUR, while weighing on Eurozone stocks.
🇺🇸 US Markets ↕️/↗️
Cyclical Stocks ↕️/↗️
Tech/Growth Stocks ↕️/↗️
Financial Stocks ➡️
Defensive Stocks ➡️
Energy Stocks ↗️
Materials Stocks ↕️/↗️
💱 Forex (driven by ECB rate decision)
CAD ➡️/↗️ (benefiting from high oil/gas prices)
AUD ↗️/➡️ (lose some of earlier gains)
USD, JPY, CHF ➡️
EUR ↘️/↗️ (benefiting from today's ECB action; EUR remains medium-term weak)
⚒ Commodity Markets ↕️/↗️
Oil prices ↗️/➡️ (remains bullish – after strong gains, today's gains limited)
Natural Gas prices ↗️
Metal prices ↕️
Precious Metal prices ➡️ (USD remains stable and likely gold as well)
⚡️Cryptos ➡️/↗️ (benefits from hopes Fed at end of tightening)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)