CPI DATA MOVED THE MARKETS STRONGLY YESTERDAY

Shares in Hong Kong rose 488 points or 2.8% to 17,884 in early trading on Wednesday, reversing Tuesday's weak session and reflecting a rally on Wall Street overnight after weaker US CPI data fueled bets that the Federal Reserve's tightening cycle had peaked. The Hang Seng approached its highest level in more than a week, as traders reacted to new data from officials in China that showed industrial production and retail sales grew more than estimated last month. Meanwhile, the People's Bank of China injected the most cash since 2016 into the banking system and kept the one-year policy lending rate at 2.5%. Investors are now closely monitoring the meeting between Chinese President Xi Jinping and his American counterpart, Biden, today in search of a possible easing of tensions.

INDEXES

US stock futures rose today, Wednesday, after the major averages posted a strong rally in the last regular session. Sentiment was also helped by the news that the US House of Representatives passed a bill to prevent a government shutdown. In regular trading on Tuesday, the S&P 500 and Nasdaq Composite rose 1.91% and 2.37%, respectively, posting their best one-day performance since April. The Dow also rose 1.43%. All 11 S&P sectors finished higher, led by real estate, utilities and consumer discretionary. Strong gains were also seen from mega-cap tech names such as Tesla (6.1%), Nvidia (2.1%), Apple (1.4%), Amazon (2.3%) and Meta Platforms (2.2 %). Those moves came as U.S. inflation data came in lower than expected, reinforcing views that the Federal Reserve will no longer raise interest rates and put downward pressure on Treasury yields. For today we will be waiting for the retail data.

COMMODITIES

ORO

Gold strengthened above $1,960 an ounce on Wednesday, extending its gains for a third session, as a surprisingly weak reading on US inflation reinforced bets that the Federal Reserve will no longer raise interest rates. The data sharply lowered dollar and Treasury yields, boosting demand for the yellow metal. The CPI report showed that the US inflation rate slowed more than expected to 3.2% in October from 3.7% in September, while the base rate fell to 4%, the lowest level in more than two years. Markets now see no chance of another rate hike at the Federal Reserve's December meeting, while bets on a rate cut in May next year have risen to around 50%. Gold also found support this week after Moody's downgraded its US credit rating outlook from stable to negative, citing rising fiscal deficits and political clashes in Washington.

FOREIGN EXCHANGE

EURO

The euro rose to the $1.08 mark, hitting its strongest level since early September, as investors dumped the dollar after data showed the US inflation rate slowed more than expected in October. The annual inflation rate in the United States slowed to 3.2% from 3.7% in September, slightly below forecasts of 3.3%, while the base rate fell to 4%, the lowest in two years. The euro had previously gained ground following the revelation that German investor confidence in November exceeded expectations, marking its first entry into positive territory since April. On the monetary policy front, ECB President Christine Lagarde stated last week that interest rates would remain restrictive for several quarters. Additionally, a recent Bloomberg survey indicated a possible drop in eurozone inflation below the 2% target by early 2025, an earlier timeline than the ECB anticipated. This suggests the possibility of an initial rate cut in June 2024, compared to September, as previously expected.

Chilean peso

The Chilean peso dollar suffered a strong appreciation of more than 30 pesos yesterday, reversing all bullish bets for the national currency, breaking the $900 peso mark and closing close to the $890 area. For now we will wait for some type of rebound and with more bearish outlooks as the next FED meeting approaches to decide exchange rates for the United States. Without a doubt, this resounding fall of the peso surprised everyone since it was not expected that the CPI data of the North American country would be taken in such a good way, making our currency one of those that appreciated the strongest in Latin America.