The record-breaking run higher in the benchmark US stock index, the S&P500, came to an end as US inflation data for October increased by more than expected to 6.2 per cent, the highest level since 1990.
The ASX200 once again underperformed its peers as Australian labour force data disappointed and iron ore prices continued to slide.
Here are the top five things that happened in markets this week.
1. US inflation data
Inflation in the US surged by 0.9 per cent in October (mainly due to higher food and energy prices), sending the annual headline inflation rate to 6.2 per cent, the highest level since 1990.
This challenges the US Federal Reserve’s view that rising inflation is “transitory” and may see the pace of the Fed’s tapering of bond purchases accelerated.
2. Rivian IPO
Electric vehicle car company Rivian (NASDAQ RIVN) floated on the Nasdaq exchange at $106.75, well above the $78 IPO price.
It is one of the largest IPOs in US history.
With a valuation of $US100 billion ($136.8 billion), it provides the startup with a market capitalisation greater than traditional car manufacturing company GM and one of its backers, Ford.
3. Australian labour force data
Australian labour force data disappointed as the unemployment rate rose to 5.2 per cent from 4.6 per cent.
The survey period was September 26 to October 9, before the reopening in Victoria and New South Wales.
The easing of restrictions in NSW, Victoria, and the ACT should see improved numbers next month.
4. Fresh all-time highs for Bitcoin
Bitcoin made another fresh all-time high at $US69,000 ($94,396) after the stronger-than-expected US inflation data, reflecting its status as a “digital inflation hedge”.
However, as noted above, higher-than-expected inflation may encourage the Fed to accelerate the rate of tapering and raise interest rates sooner.
Reduced central bank liquidity and higher interest rates are a headwind for risky assets, including crypto, partially explaining why Bitcoin promptly retreated towards $US64,000 ($87,556).
5. Gold marches higher
Gold traded to $1868 per ounce, its highest level in six months after real yields (the interest rate adjusted for inflation) tumbled to all-time lows and as the market scrambled to hedge rising inflation.
The break above resistance near $1840 appears bullish and sets up a test of resistance at $1916, coming from the high of June 2021.
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