US inflation, a slump, and a final buying opportunity

Investors breathed a sigh of relief last week after data from the United States (US) Department of Labor showed that US inflation finally eased from its four-decade high. The Consumer Price Index (CPI), an index used to measure the rate of price increases among households, came in lower than analysts expected: It increased 8.5% from a year earlier, cooling off from the 9.1% high that we saw in June.

The below-forecast reading came on the back of a sharp drop in energy costs and provided a much-needed boost to risk assets globally. Oil prices have now fallen to $97 a barrel as concerns about a recession have reduced demand expectations to below their pre-Ukraine war levels. Lower oil prices were also supported by data showing that US oil stockpiles were at their highest levels since December 2021, thanks to an increase in domestic output. Globally, a tight oil market saw some relief when a dispute linked to sanctions was resolved, allowing oil to flow from Russia to three European countries.