Commentary

Stocks gain with Technology counters

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Equity markets were mostly green as the latest inflation hint further easing is on the way. This gave technology stocks a boost indeed, as CPI rose less than 5%, which is less than most economists expected.

Market participants are relieved that the Fed’s monetary tightening policy is beginning to bring down inflation. It increases the odds that the Fed can pause its rate hike in June. A lower rate boosts the value of future income streams of long-duration counters like technology stocks. Thus, it was the shiny sector of the day.

Gas prices are a roadblock to a further drop in inflation

Gas prices had jumped even as the general price level eased in April. Indeed, headline prices climbed 0.4% in April, increasing from 0.1% in March. Most of this jump is attributed to gas prices, and most economists expect such impact to fade as May data is released.

Furthermore, while shelter inflation continues to be a headache, it has shown signs of deceleration over the month.

We are seeing renewed inflation in car prices and insurance, but overall, the inflation outlook seems to be in the right direction.

Despite the slower pace than most expectations, we are seeing a deceleration in inflation. Even as the Fed decides to pause rate hikes, there is little evidence by the Fed to cut rates.

What’s on the menu today?

8.30 pm: Initial Jobless Claims, PPI (MoM)

It is 11 May, Thursday, 8.50 am in Singapore and 8.50 pm in New York. It has been a good week of trading and we hope all our friends have a splendid day at work and in school.