Overnight Market Review (2022.7.13) On Tuesday, European and American markets were still deeply troubled by investors’ concerns about the prospect of a recession. U.S. stocks fell ahead of the release of the heavy CPI data. The dollar benefited from safe-haven demand and continued to be strong, while the euro remained in trouble both at home and abroad.
Accelerating inflation likely reflects higher gasoline prices and stubbornly high food prices. The U.S. retail gasoline price exceeded $5 a gallon in mid-June, contributing at least 0.5 percentage point to the month-over-month increase in the CPI. A higher-than-expected headline CPI reading (Wednesday) should pave the way for another 75bps rate hike by the Fed later this month; a situation widely interpreted as a negative for gold.
Before the market on Wednesday, the U.S. CPI exceeded market expectations, triggering a dive in U.S. stock index futures. Dow futures fell more than 350 points, and Nasdaq futures fell more than 2%.
Trading strategy deployment: it is recommended to go short at high levels
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