Wall Street is trading with a mixed sign this Wednesday after losses on Tuesday, in a market that took a breather after the bullish festival caused by the Donald Trump's victory in the US elections. Now, investors' attention has focused on the inflation data. «Investors continue to navigate the idea that Donald Trump's pro-growth policies and tariffs will boost inflation in the United States and will limit the capacity of the Federal Reserve (Fed) to make monetary policy as flexible as previously anticipated,» assesses Ipek Ozkardeskaya, senior analyst at Swissquote Bank. Thus, in this session the focus has fallen on the October CPIwhich has registered a slight rebound in general rate up 2.6% from 2.4% previously; while the underlying variable has remained at 3.3%. When analyzing the figures, Srijan Katyalglobal director of strategy and commercial services at the international brokerage ADSS, highlights that «this reading has slightly altered the disinflationary pattern that we have observed in recent monthsbut continues to hold steady around the target level.» «This pattern (coupled with unexpectedly weak labor market data reported earlier in the month) is likely will reassure the Federal Reserve that its recent 25 basis point interest rate cut was the correct course of action«, he adds. Meanwhile, Kathleen Brooksresearch director at XTB, comments that «although October inflation was in line with expectations, this does not guarantee a rate cut in December by the Federal Reserve«There is another CPI report due out the day before the FOMC meeting, and the November payrolls report will also be crucial after the October report was interrupted by weather events. Following this IPC report, the probability of a rate cut by the Federal Reserve in December has dropped to 58%, down from 82% probability of the day before the US elections,» he concludes. However, in the market there is a «sense of real caution against a rebound in inflation and the expectation that Trump's policies will continue to cause it to rebound throughout 2025, which will inevitably cause us all to revise upward the level of rates at which we will be in, say, the next 2 years «, they indicate from Bankinter. «And, in the event that central banks apply fewer rate cuts, then stock market valuations could be revised downwards (unless this is offset by profit expansions revised upwards) and IRRs of bonds should rise. It is not dramatic, but it can represent a trend change that cools market sentiment for a while«, add these experts. The agenda will also include the publication of the production prices of October and weekly unemployment claims (Thursday); as well as the retail sales (Friday).
COMPANIES AND OTHER MARKETS
At the business level, Shopify shoots up 10% after announcing some results which, although they have not exceeded expectations, have shown an increase of 11% in the total of monthly active users. Besides, Spotify shoots up 11% after releasing its results for the third quarter of 2024 and reporting a 11% growth in its monthly active users, up to 640 million, and beat all expectations. On the opposite side, Super Micro Computer shares sank 5% after the technology company assured that «cannot file its quarterly report» with the US Securities and Exchange Commission (SEC, for its acronym in English). It has also been news that Rivian and the Volkswagen group have signed an agreement to create a joint venture ('joint venture') called Rivian and Volkswagen Group Technologies in which the German manufacturer will invest 5.8 billion dollars in the United States until 2027, longer than initially planned. In other markets, oil West Texas drops 0.70% ($67.72) and the Brent fell 0.64% ($71.75). For his part, the euro se depreciates 0.16% ($1.0605), and the ounce of gold earn 0.64% ($2,620). Furthermore, the 10-year American bond yield relaxes at 4.392% and the bitcoin advances 0.82% ($90,361).