Three reasons why you don't need to panic about inflation
After the release of recent US inflation data, moomoo Market Strategist Jessica Amir spoke with Michael Depp from Ticker TV to discuss its implications, and why investors shouldn't panic.
US inflation has risen more than expected for the third consecutive month, primarily driven by increases in essential commodities such as oil, electricity, takeaway food, and medical costs.
Despite this, the data shows there are three reasons not to worry about the increase in inflation:
The year-on-year rise in CPI stands at 3.8%, down from its previous high of 9%. This suggests that although inflation has increased, it is not as significant as it may seem.
Robust CPI and economic growth numbers indicate a positive outlook for US corporate earnings, which are expected to be strong this year despite previous downgrades.
The S&P500 has experienced five 1% drops this year, all of which were met with investors buying the dip, indicating confidence in the market's resilience.
Furthermore, AI and chip stocks like Nvidia have been sold off of late, with Nvidia（NVDA）shares rising by 1.97% after a 9.2% decline since March 26. This supports the dip-buying strategy. Also, the VIX index, a measure of market fear, dropped from this month's high to 15.80, indicating reduced investor apprehension.
Looking ahead, the US earnings season is expected to be strong, with many companies set to exceed expectations. Sectors like AI and energy are particularly noteworthy for potential earnings surprises.
In terms of market trends, inflationary pressures are expected to impact Australia as well, especially with the rise in oil and energy prices. However, this also underscores the push for cheap and clean energy solutions, such as uranium.
Globally, commodities like uranium and gold are defying gravity, supported by rising global demand and central bank purchases. With the expectation of two rate cuts in 2024, gold stocks are also poised to shine this year.
Overall, while inflationary concerns persist, there are reasons to remain optimistic about market resilience and investment opportunities in the year ahead.
Click to watch the full interview (Recorded on April 11th).
