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Market Analysis |13 September 2023

Stocks Under Pressure Ahead of CPI – Nasdaq drops 1%

US stock indices took a hit yesterday as investors look ahead at crucial CPI data later today with expectations that inflation will remain sticky. The Nasdaq led the way lower, dropping 1.04% on the day, aided by Apple taking a 2% on the release of iPhone 15. The Dow and the S&P also fell, closing down 0.05% and 0.57% respectively. US Treasury yields remain bid across the board, the rate-sensitive 2-year still trading above 2% and the benchmark 10-year holding just under 4.3%. The dollar remained in recent ranges but gained back its losses from earlier in the week with the USDJPY noticeable again, back up above the 147 level and Oil continues to move higher adding to the general inflationary concerns for investors.

Oil Looking at $100 per Barrel Again

Oil prices have continued to move higher as supply-side pressures continue to exert pressure, West Texas Intermediate jumped another 1.8% yesterday hitting a 10-month high, is now trading above $89/b with Brent close to the $92.50/b level. OPEC expects a deficit of 3.3 million barrels a day in the fourth quarter, while the US Energy Information Administration also predicts a 230,000-barrel deficit. Demand in China has remained strong despite a downturn in other metrics, and this has contributed to the surge black gold over the last few months. Traders are now looking at prices extending through the $100 level, and this is just adding to inflationary concerns, especially in the US ahead of key data later today.

Focus on US CPI Data Today

Traders are expecting quiet trading conditions ahead of the key CPI numbers in the United States later today. The Asian session has so far followed in line with those expectations, risk trades remaining under pressure in line with the lead from US markets but trading in tight ranges, with nothing major on the event calendar. There is the distraction again of major UK data on the London Open, this time the latest GDP data due out early in the session but it is just an entree before the main course coming later in the day. US monthly Core CPI, CPI and yearly CPI numbers are all out, with expectations of increases of 0.2%, 0.6% and 3.6% all set to confirm ‘sticky’ inflationary conditions in the US with any numbers sitting away from expectations set to see markets move hard.