Spreadex Market Update

Inflationary fears strike away as Nasdaq and Nikkei losses feed into Europe



A late collapse from the Nasdaq led to a nasty session for the Nikkei led to a really rough start for Europe on Tuesday.

The tech slide not only gave the Nasdaq its worst day since March but prevented the Dow Jones from closing above 35,000 for the first time in its history.

Ahead of Wednesday’s US CPI reading, it appears that investors’ inflationary fears have been reignited by surging commodity prices (something that won’t necessarily be reflected in tomorrow’s figures). It’ll be interesting to see how much the markets are reassured if Wednesday’s number does fall from 0.6% to 0.2% month-on-month as forecast.

The impact on Europe was swift, undoing much of the growth managed this May. For example, after tickling a fresh 14-month peak on Monday, the FTSE found itself desperately paddling to stay above 7,000 as it plunged 1.9%. This was accompanied-slash-prompted by a stark reversal from its previously buoyant mining sector.

The DAX’s decline was similarly severe, with a 1.7% drop knocking it back under 15,200 for the first time in 5 days. And the CAC found itself slipping below 6,280 as it tumbled 1.6%.

At present the Dow Jones is expected to avoid the same level of losses as Europe, with the futures indicating a 0.4%, or 145-point, decline. That would leave the Dow around 20 points above 34,600.

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