Inflation eased, but still, it's high

Inflation eased, but still, it's high
Analysis
Ahura Chalki
Author:
Ahura Chalki
Published on: 12.05.2022 08:41 (UTC)
Post reading time: 1.5 min
145

Red is the primary color


After last week's employment numbers and banking decisions, focuses this week have been turned toward inflation numbers in the US.


According to the US Bureau of Labor Statistics, headline consumer prices increased 8.3% on an annual scale in April. Even though it was slower than the 8.5% pace of March and lifted the hopes that inflation has peaked and is now decreasing, it was also higher than 8.1% of market forecasts. 


The critical point on inflation numbers was Core CPI. Price of goods and services, excluding food and energy, increased in April by 0.6%, twice more than 0.3% in March, and higher than 0.4% estimates. 


These data tell us that numbers are increasing even if we exclude the energy and food prices, which were the main inflation drivers. Therefore we can say that inflation is rooted in all sectors, and with a bit calmer geopolitical tensions and lower energy prices, we can not bring it down that fast. 


This higher inflation and fears about the stagflation are now moving the markets and affecting the sentiment toward cash and lower trade or investments. 


As a result and reaction, US markets eased after the news, then closed sharply lower. S&P 500 lost 1.65%, Dow Jones Industrial Average closed 1.02% lower, and the NASDAQ composite by 3.18%. These fears and moving lower continued today in the future markets as well. 


From the technical point of view, the SP500 trend remains bearish in the Daily chart. Price moves well under main MA lines, and MACD histograms are under the 0-line. The market volume is also more than 20DMA, supporting the bears. 20DMA at 4,200 is the critical resistance, and bulls need to move above that at the first stage. Otherwise, we can still count on lower numbers to be seen. 


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