Daily summary: US stocks erase earlier gains as investors digest inflation figures

• US CPI inflation highest since December 1981
• Russian troops reportedly used chemical weapons in Mariupol
• OPEC cuts forecasts for both global oil consumption and supply

European indices recorded another session of losses, with DAX 30 losing 0.5% amid concerns that rising inflation and higher interest rates could push the EU economy into a recession. March inflation in Germany rose to 7.3%, a level not seen since 1981, while wholesale inflation hit a record high. Markets are gearing up for Thursday’s ECB meeting and will look for clues regarding central banks next steps. At the same time, worries about a prolonged war in Ukraine continued to weigh on market sentiment.  The EU is reportedly drafting proposals for an oil embargo on Russia after unconfirmed news that chemical weapons might have been used in Mariupol. Putin today said talks were at a 'dead end', something that suggests a new offensive is imminent. In terms of individual share price movement, shares of Deutsche Bank dropped over 9%, while Commerzbank was down 8.5%.

Wall Street indices erased all early gains and are currently trading near the flatline as investors monitored the latest reading of US inflation data ahead of the kickoff of the earnings season on Wednesday.US inflation in March accelerated to 8.5% YoY from 7.9% YoY, slightly above market expectations. Monthly reading was 1.2% MoM, which shows that we are still struggling with growing price pressure and not only the base effect. On the other hand, it is worth noting that mainly fuel, food and housing prices increased. If we take into account the core inflation, which deducts the two above-mentioned aspects, the monthly dynamics amounted to “only” 0.3% MoM, with the expectation of an increase by 0.5% MoM. If the crude oil price stays around the $100 per barrel region, then inflation may stabilize, however this may probably occur only in the middle of the year.

Precious metals moved sharply higher partially thanks to Putin comments, while WTI crude price rose over 6% and managed to return above the psychological barrier at $100 per barrel, following the news that Shanghai eased some virus restrictions and OPEC lowered expectations regarding global oil consumption and supply this year. Major cryptocurrencies are trying to defend key support levels. Bitcoin swings around $40,000 level while Ethereum bulls try to keep the price above $3000 handle.

USDCHF extended earlier declines following the release of US CPI inflation report, however sellers failed to break below major support at 0.9290. In the evening buyers regained control and price jumped above the earlier broken lower limit of the triangle formation. Source: xStation5