Morning Minutes

US Indices Stabilize Despite More Signs on Increasing Inflation Pressures




Yesterday’s selloff in the US, which was sparked by higher than expected consumer price inflation which ignited concerns that interest rates may have to rise in future, sent shockwaves through world markets overnight. In Asia Pacific trading, the Nikkei and the Hang Seng plunged 2.5% and 1.8% respectively, while in Europe this morning, the FTSE is down 1.3% and the Dax is down 0.6%. Meanwhile, commodity markets have also been hammered with WTI crude oil down 2.0%, and copper down 1.0%.

Signs of growing inflation pressures in the US continue to emerge with the monthly producer price inflation price report showing price growth accelerating more than expected (6.2% vs street 5.9% and previous 4.2%). Signs of upward pressure on wages as the economy reopens have also emerged this morning with McDonalds announcing plans to increase hourly rates for employees at company owned restaurants in the US by 10% as it looks to hire 10,000 new employees in the coming months.  Meanwhile, the job market also continues to improve in the US with weekly initial jobless claims falling to 473K from 507K last week which was better than the 490K the street had expected.

With a tug of war on between positive employment data and concerning inflation data, US index futures have bounced up off of overnight lows and are currently mixed with Dow futures flat and NASDAQ futures up 0.6% following plunges of 2.0% for the Dow and 2.6% for the NASDAQ yesterday.

In earnings news today, Canada Goose beat street expectations on both earnings per share ($0.01 vs street -$0.09), and sales $208.8M vs street $137.7M).

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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