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The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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SPX500 Heads for 4,000 with Most Important CPI Print Ever

The SPX500 has moved for the 4,000 level, with all significant indices higher as traders expect a weak CPI print.

US inflation on Thursday can make or break the stock market, depending on the outcome.

SPX500 – Daily Chart

SPX500 Daily Chart

The SPX500 has resistance just above the 4,000 level, which can open a move to the 4,100 level. Support would be at 3,800 if the inflation data were to disappoint with a higher number.

Wednesday's CPI event risk "could be a decider where the S&P 500 can either break above its 200-day moving average, the 4,000 level and the downtrend line, or we head back to 3,800," Aurel BGC trader Gurmit Kapoor told Bloomberg.

Slowing in inflation over the last months, analysts expect to continue with a print of 5.7% expected for CPI, down from 6%. In the headline inflation figure, analysts see a big move to 6.5% from 7.1%. However, some are not so convinced and are worried about specific indicators.

Analysis from investment bank JP Morgan predicted an 85% of at least a 1.5% move higher in stocks with a print below 6.6%. They also saw a 15% chance of a 2.5-3% move lower in the number above 6.6%.

Nomura's Charlie McElligott said the CPI print "is a bigger deal than the market is already giving credit for." Options markets are heating up, and a big move could happen after the inflation print.

The data will be a big deal for investors as a soft number will imply that the Federal Reserve's rate hikes are working and that they will slow on further increases. US consumer inflation is expected to have fallen slightly in December due to a sharp drop in gasoline and energy prices, but the annual rate is likely to remain high.

"We welcome it with open arms. It's good news," said KPMG chief economist Diane Swonk. "It's great and it helped to fuel consumer spending in the fourth quarter... But it's still not enough."

The release will be the final CPI report before the Federal Reserve's February 1 interest rate decision and could lead to a big market move.

Last Updated: 12/01/2023

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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