S&P 500 futures are down by more than 1% in premarket trading as traders are worried about rising inflation. Not surprisingly, inflation worries put serious pressure on tech stocks. Yesterday, Nasdaq was down by 2.5%, and this downside move is set to continue at the start of today’s trading sessions as Nasdaq futures are down by almost 2% in premarket trading.
Investors will have to wait for inflation data until Wednesday when the U.S. will release Inflation Rate and Core Inflation Rate reports. Inflation Rate is projected to increase by 3.6% year-over-year in April as prices were under pressure in April of 2020. On a month-over-month basis, Inflation Rate is projected to grow by 0.2%. Core Inflation Rate is expected to increase by 2.3% year-over-year.
The Fed has many times stated that it was ready to tolerate inflation above 2% for some time, but the stock market looks worried that the situation may get out of control. Interestingly, bond traders remain calm, and the yield of 10-year Treasuries is little changed at 1.60%.
OPEC Maintains Its Oil Demand Forecast
OPEC has recently released its Monthly Oil Market Report and kept its oil demand growth forecast unchanged. OPEC expects that world oil demand will increase by 6 million barrels per day (bpd) and average 96.5 million bpd in 2021.
OPEC noted that it had decreased its oil demand forecast for India due to the challenging situation with coronavirus in the country, but it was optimistic about transportation fuel data from the U.S. and acceleration of mass vaccination programs in various countries.
OPEC’s demand forecast did not provide support to the oil market, and WTI oil declined towards the $64 level.
Gold Moves Towards The $1850 Level
Gold has clearly benefited from inflation fears in recent trading sessions as traders rushed to buy the traditional safe haven asset which is often viewed as a natural hedge against inflation.
Currently, gold is trying to get to the test of the $1850 level. Shares of gold miners pulled back yesterday as some traders used the recent upside move as an opportunity to take some profits, but gold’s move above the $1850 level will likely boost interest in the segment.