Inflation data sparks sharemarket rally

Mr Sequeira said while the outlook for inflation and rates in the US has eased, a softening in hawkish sentiment from the Fed is not a given.“The problem for the Fed is that when interest rates across the curve start to come down and markets rally, it makes their job a little bit harder,” he said,

Australian shares have fared better, declining just 5.7 per cent, buoyed by elevated commodity prices.BetaShares chief economist David Bassanese said the weaker-than-expected US CPI outcome is good for markets and helps widen the “narrow path” ahead for the US to avoid recession. “Depending on the extent of slowing in the real economy in coming weeks, there’s even a chance the Fed only raises rates by 0.25 per cent in December.”

“In turn, this suggests that global equity markets have yet to hit bottom, notwithstanding a potentially solid bear market rally in coming weeks in expectation of a smaller US Fed rate increase next month,” he said.Advertisement

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