Why US Stock Markets and Gold React to New US Price Data - Analysis from a Financial Expert

Why US Stock Markets and Gold React to New US Price Data - Analysis from a Financial Expert

According to a report by finanzmarktwelt.de,

The current US price data has a negative impact on the stock markets and the price of gold. Since 2:30 p.m. the US indices, the Tech 100, have fallen by 254 points, the US500 by 28 points, and the Dax by 55 points. In addition, the price of gold fell by $10 to $1,996. This development is due to the current US price data, which was higher than expected. US producer prices rose 0.3% month-on-month, against expectations of 0.1%. The year-on-year comparison and the details on the core rate were also higher than expected. Based on this data, market participants suspect that the Federal Reserve will keep interest rates high for longer in order to combat prices that are too high. This leads to higher yields on bonds and tends to weigh on companies, causing stock markets to decline.

The data suggests that the tech rally could soon regain the upper hand and share prices could rise. However, the higher price data will temporarily dampen the stock euphoria. The chart shows a recent move in which the US tech market is falling while the 10-year US Treasury yield has risen. The yield has risen from 4.15% to 4.31% since midday Tuesday, thanks to twice-higher-than-expected price data.

This development could lead to weaker market sentiment in the short term, particularly due to uncertainty about the Federal Reserve's future interest rate policy. Investors and market participants should therefore monitor developments closely and adapt their investment strategies accordingly.