Caution Continues

Caution Continues

CMC Markets  | Feb 13, 2018 13:13

Originally published by CMC Markets

The stock market has recovered this morning but is yet to exhibit signs of bargain hunting exuberance

The S&P/ASX 200 is up 0.4% half way through the trading day, underperforming the US S&P 500 which rose 1.4% last night. This partly reflects the fact that the local market has not fallen as far. The S&P 500 is currently 7.5% below this year’s peak while the ASX 200 is down a more a more subdued 4.6%

However, this morning’s muted rally is likely to reflect caution ahead of this week’s US inflation data. Higher than expected inflation could send bond yields higher and provide equity markets with another scare. However, a lower than expected CPI read is likely to leave markets uncertain for some time, even if there is a positive knee jerk response. More data will be required to conclude that US wage growth remains subdued or that wage growth is not pushing inflation materially higher.

CMC Markets

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