With inflation fears frequently gripping the markets, does the Dow Jones stand any chance of returning to its 35,000 all-time highs?
US: Can Dow Jones get back to 35,000?
Last Wednesday’s inflation data was the last thing US investors wanted to see. Already concerned with inflationary pressures due to rapidly rising commodity prices and some key data out of China, April’s CPI reading was make or break for the markets.
Instead of falling from 0.6% to 0.2% month-on-month, it rose to 0.8%, hitting an annual rate of 4.2% – more than double the Fed’s standard 2% target. To rub salt into the wound, the core reading rose from 0.3% to 0.9% month-on-month, striking an annual rate of 3.0% against the 2.3% forecast.
All this left the Dow Jones with an inflation migraine and its worst daily performance since January. And this just days after it had struck 35,000 for the first time.
The week’s economic calendar, then, is going to have to be pretty exemplary if the Dow is going to be won over.
A quiet Monday is then followed on Tuesday by the CB consumer confidence and new homes sales readings.
Thursday is then the biggie, where the second look at the Q1 GDP reading – which last came in at an annualised rate of 6.4% – is joined by the durable goods orders, pending home sales, and the usual weekly jobless claims numbers.
Friday, finally, sees the Fed-favourite core PCE price index inflation-measure, alongside the goods trade balance, personal spending, personal income, Chicago PMI and consumer sentiment numbers.
UK: A quiet week on the data front
The UK is facing an achingly quiet week on the data-front, one that is likely going to leave the FTSE and pound on a US leash when it comes to their respective trading performances.
The public sector net borrowing number is out on Tuesday, followed on Thursday by the Nationwide HPI reading.
Things are slightly more interesting in the Eurozone than they are in the UK, though not by much.
Tuesday’s German Ifo business climate reading is following on Thursday by the French preliminary Q1 GDP figure, and on Friday by German retail sales and Spanish and Italian inflation.
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