The US stock market is very much picking up the moment from the European markets, where investors and traders have been unsure about the price action. Basically, traders are digesting the data that came out during the Asian trading session and driving the price action there. In addition, we had fresh economic numbers out in Europe, where traders have paid attention to the latest economic developments and are trying to understand their implications.
European trading session
During the European trading session, most of the trading indices remained on the downside side—meaning in the negative territory. Most of the price action was very much driven by the massive tumble in the BMW stock, which declined over 9%. It was not only the car maker that was under pressure, but we also saw the shares of the AstraZeneca tumbling as well. The stock price plunged as much as 5% during the trading session, and this further added pressure on the European trading session.
But the main driver for the price action has been the economic data. For instance, in the UK, we had average index data that confirmed that the growth in the salary is not happening. This means that consumers in the UK, which are immensely pushed against the rope and getting battered by a higher cost of living crisis, including ultra-high interest rates, have little hope for recovery. But the bad news does have some silver lining in it as it brings good news for the Bank of England, which has been very much hoping for the wage pressure to ease off as that will have a more positive impact on the inflation. This is because a wage growth with a positive number shows that inflation is going to move higher, and a wage growth with lower numbers shows that inflation may not go up. For the Bank of England, this is highly important as it is trying to bring inflation lower, and a lower number for the average salary brings more good news for them. So now, the hope would be that the Bank of England will lower the interest rate.
Then the other economic data that has been very important for markets was the German CPI m/m. . This number actually brought good news for the market as it showed that inflation is not heating up, and this is exactly what the European Central Bank wants to see as it is in the process of lowering the interest rates.
US Trading Sessions
The focus is here very much on the data that was released last week and the commentary from the FOMC members. These comments have shown that the Fed is going to cut the rate by 25 basis points only, and this is very much in line with the commentary from the Fed Chairman, who has said very much the same thing a few days back.
High-frequency traders, who thrive on volatility and use trading VPS, will be closely monitoring tomorrow’s release of the US CPI data. The forecast predicts a drop in the inflation rate to 2.6% from the previous 2.9%. If the data meets expectations, it would signal positive news for the markets.