Markets Mixed as US Inflation Data Digested

Dow Jones  => Holds above 36000

Tesla            => Rises 7.7% in 3-days

Oil                => Eases from 2-month high

Dow pares mild gains

The Dow Jones closed 0.1% higher on Wednesday. However, the futures are falling lower as investors continue digesting the surge in US inflation. Consumer prices rose to 7% in December. Given that the headline figure was in line with analysts’ estimates the market reaction was muted, provoking a selloff in the USD and mild gains in US equities.

Today the US economic calendar remains very much under the spotlight with the release of US wholesale inflation, measured by the producer price index, and also jobless claims. In addition, to the release of macro data, Fed speakers could also offer further insight into the path of monetary policy at the Fed.

U.S. CPI inflation YoY Dec.

U.S. PPI inflation YoY Dec.

U.S. Jobless claims

Actual: 7% (0.2%)

Expected: 9.8% (0.2%)

Expected: 200k

Previous: 6.8%

Previous: 9.6%

Previous: 207k

Dow Jones tixee market update
Where next for Dow Jones?

The Dow Jones extended its rebound from 35630, this week’s low running into resistance at the 50 sma on the 4-hour chart. The price is currently caught between the 50sma on the upside and the 100 sma on the downside. A break-out trade here could see the buyers waiting for a move above the 50 sma at 36391 in order to target 36900 and fresh all-time highs. Sellers might look for a move below the 100 sma at 36200 to target a move towards the weekly low.

Why Tesla shares jumped 7% this week?

The EV maker’s share price jumped just shy of 4% on Wednesday despite U.S. inflation surging. In fact, this week has been a strong week for Tesla’s share price which has gained 7.7%. Strong deliveries from Tesla’s China plant appear to be behind some of the gains this week after Tesla reported that it delivered a record number of EVs from its China plant last month. Production from Tesla’s Shanghai factory is strong, with 71,000 vehicles delivered in December, up from 53,000 in November, marking a big increase. In 2021, globally Tesla delivered around 936,000 vehicles. This is expected to rise to 1.4 million vehicles in 2022. 

Where next for crude oil?

After rising 5% in just two days, WTI crude oil is easing lower on Thursday. The jump in oil prices came as the US dollar fell, making oil cheaper for buyers with other currencies.  Crude oil prices received an additional boost from the Energy Information Administration which showed that stockpiles fell by more than forecast last week. Sock piles fell by 4.6 million barrels, more than the 1.3 million-barrel decline forecast by analysts. However, the data also showed that fuel demand has taken a hit from Omicron, as gasoline stockpiles rose by 8 million barrels.  The hit from Omicron is expected to be short-lived.

Support can be found at 80.00 (round number) and 78.94 (50 sma 4 hr chart).           

Resistance can be seen at 83.00 (round number) and 85.40 (multi-year high).


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