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Stock market tumble amid sticky inflation data, USD jumps

US dollar

Wall Street snapped a four-day winning streak following higher-than-expected September CPI data. The US headline CPI printed at 3.7%, higher than an expected 3.6% due to high energy costs. On a monthly basis, inflation climbed 0.4%, higher than an expected 0.3%. The data sent the US bond yields soaring as markets were pricing “higher for longer interest rates” by the Fed. Notably, the small-cap index, the Russel 200, was hit the most, slumping more than 2%, given the high debt ratio in its components. With the unrest in the Middle East, oil prices face an upside pressure, making markets cautious about the global economic outlook.

In FX, the US dollar index rebounded sharply following the hotter-than-expected CPI data, while commodity currencies, including the Australian dollar and the New Zealand dollar, tumbled against the USD. Gold prices were also pressured by high bond yields, pulling back from a two-week high.

In Aisa, Chinese banking stocks soared after a state fund, Central Huijin Investment, increased its stake in the “Big Four,” boosting the regional markets, with the Hang Seng Index surging nearly 2% on Thursday. Investors will keep an eye on a slew of influential economic data, including China’s CPI, PPI, and Trade Balance, to be released today. The slump on Wall Street is set to pressure on the Asian markets, with futures pointing to a lower open across the APAC. The Nikkei 225 futures were down 0.72%, the ASX 200 futures fell 0.66%, and Hang Seng Index futures were down 2.05%. 

Price movers:

  • 9 out of 11 sectors in the S&P 500 finished lower, with Materials and Utilities leading losses, down 1.52% and 1.49%, respectively. Energy and Technology were slightly higher, both up 0.1%, as funds sought safety to big techs and oil producers.
  • Birkenstock slumped for the second straight trading day following its debut on Wall Street. The German sandal maker’s shares fell 6% and closed at just under US$38 per share on Thursday after a 12% slump on the first trading day. The price is now 18% down from its IPO price of US$46.
  • Gold snapped a 4-day winning streak as the USD strengthened amid sticky inflation data. Spot gold pulled back from near-term resistance of 1,884, continuing its downtrend since hitting an all-time high of 2,081 in early May.
  • Crude oil pulled back from a session high as the US inventory data showed the oil stockpile hit an eight-month high. The EIA reported that the estimated US production is 13.2 million barrels per day for the week ended 6 Oct, up 300,000 from the prior week, and is the highest on record.

ASX and NZX announcements/news:

  • No Major announcement.

Today’s agenda:

  • China’s CPI, PPI, and Trade Balance for September
  • China’s New Yuan loans and M2 money supply
  • US Prelim UoM Consumer Sentiment
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