Investors Assess Rising UK Inflation and Increased Oil Volatility

Plenty has happened over the past 24-hours, both within the geopolitical sphere, and the financial trading markets.  One of the main pieces of news is related to the missiles which landed in Poland yesterday evening, killing two citizens. The event triggered emergency meetings in Poland, NATO and other global organizations.

So far the markets have not strongly reacted but investors are keeping a close eye on the situation as an escalation can create serious volatility. It is not yet known whether the missiles were fired from Ukraine or Russia, but most experts advise it's almost certainly an accident or fault in defense systems.

Within the market itself, one of the latest developments is coming from the UK and it's good news for Pound traders, but not for citizens. The UK has confirmed that its inflation rate has fit a whopping 11.1%. This is 0.4% higher than that which was expected and a whole 1% higher than the previous announcement. Therefore, we can see a very different scenario between the US and UK. The US so far seems to be putting inflation behind them and most likely has already peaked. Whereas the UK not only saw an increase but it was an increase of high magnitude.

GBP/USD 1-Hour Chart on November 2022

Lastly, there has also been plenty of volatility on Crude Oil which has been influenced by an incident in Oman. According to reports, an Oil Tank close to Oman was struck by a drone attack. In addition to this, the price is also being influenced by the upcoming Oil inventories this afternoon. Crude Oil Inventories are expected to decline by 2 million barrels.

SNP500

The SNP500 on the daily chart is showing a bullish candlestick but is actually still trading within the range formed since the 11th November. Currently, indicators are not providing neither a bullish nor a bearish signal due to the current sideways movement. However, traders are able to consider “breakouts” as potential indications of trends going forward.

SNP500 1-Hour Chart on November 2022

Even though the price of the overall index has performed well due to the latest inflation figures, some economists are worried that investors are not pricing in the high risk of a recession in 2023. Tesla for example has struggled over the past month due to poor earnings and also concerns regarding Elon Musk. Investors are concerned that the chief may be forced to again sell a large amount of stocks. Mr. Musk has already been forced to sell shares worth $4 Billion, but investors fear that further capital will be required. 

Disney is also another company which has worried investors. The company is the latest firm to confirm they will look to offload part of their employment force and will also halt recruitment. Their latest earnings reports came in significantly below expectations. Revenue was $20.15 billion, which is lower than the forecast of $21.38 billion. The company’s Earnings per Share fell to $0.30 from $1.09. Both reports are considered to be poor for the company and its stocks. 

Nonetheless, global stocks, including the SNP500, have performed well as large institutions and funds take advantage of the weaker Dollar and potentially lower hike in December. Though, traders should be cautious of resistance levels and if the risk of recession increases further. Lastly, this afternoon’s Retail Sales report may also influence the price of US Equities.

Summary:

• Investors are keeping a close eye on the Poland Missile Scenario as an escalation can create serious volatility.
• UK Inflation significantly rises above previous figures and general expectations. Investors believe BoE will increase the terminal rate. 
• An Oil Tank close to Oman was struck by a drone attack creating some volatility on Crude and Brent Oil. 
• SNP500 keeps hold of gains but economists fear the price may be overpriced by markets.