Market wrap: US CPI was a relief, slowed down stock rout – ANZ

In a market wrap, analysts at ANZ Bank New Zealand explained that the weaker than expected US CPI helped slow down the selloff in equities, but they remain in the red with key US indices down around 0.9% at the time of writing.  

Key Quotes:

“After a bloodbath in Asia, European shares closed down almost 2%. US treasuries have swung between small gains and losses. Italian yields rose on positive budget news, with other EU yields seeing a safe-haven bid. The softer US CPI saw USD drop with SEK leading gains on strong inflation data there, while AUD and NZD outperformed. Oil fell ~2.5% after a build in US inventories and gold rose 2.5% as investors looked for some coverage from equity selling.”

DATA/EVENT PULSE

“RELIEF: US CPI inflation came in below expectations at 0.1% m/m (mkt: 0.2%; last: 0.2%) or 2.3% y/y (mkt: 2.4%; last: 2.7%). Core inflation was also a touch weaker at 2.2% y/y (mkt: 2.3%; last: 2.2%). On a three month annualised basis, core inflation is running at 1.6%, down from 2.0% in August and 2.4% in July. Used cars were a key driver of the decline, down 3% m/m and resulted in around a 0.07%pt drag on core inflation. The number of items rising above 3% fell to 23.4% of the basket, compared to 36.6% in August and 47.7% in July. Commodity inflation less energy (which is 20% of the CPI) fell 0.3% m/m. Services inflation less energy services (60% of the index) rose 0.2% m/m.”