The cost of living climbed relatively mildly in September, partly because of cheaper gasoline prices, which kept the overall price increase down and depressed the CPI print. Still, the rise in the CPI over the past year is the highest annual inflation rate since 1982 and more than four times the annual increase in inflation in the decade before the pandemic. The fight against inflation is likely to be far from over given the recent oil output cut by OPEC+ and the rising price of crude over the past week.
After the release of the keenly awaited inflation data, all U.S. stock indices experienced a wild roller-coaster ride, reversing the initial sharp declines and finishing the session up more than 2%, despite the hot inflation readings. The rally in the stock markets suggests that investors feared inflation data could have been worse. The rally came from oversold stochastic levels and proximity to previous resistance, which often acts as a support. Nonetheless, equity markets are well and truly in bear market territory, and we favour further weakness over the medium-term. The first potential technical downside target is 3,400 followed by 3,200 in the coming months.
For magnified exposure to U.S. equity indices check out our 3x Long or Short US 500 ETPs or our 3x Long or Short Tech100 ETSs.