What Happened
US inflation pressures have broadened and reaccelerated in April, with both the Consumer Price Index (CPI) and Producer Price Index (PPI) coming in hotter than expected. Core inflation โ which strips out food and energy โ has drifted further above the Federal Reserve’s 2% target, according to UOB Senior Economist Alvin Liew. Markets are now pricing in fewer rate cuts for 2025, with the first cut potentially pushed back to late in the year.
Key Levels to Watch
On the S&P 500, support sits at 5,480 and 5,350, with resistance at 5,650 and 5,720. The Nasdaq holds support at 19,200 and 18,800, with resistance at 19,900 and 20,400. On the ASX 200, key support is at 8,100 and 7,980, with resistance at 8,300 and 8,450.
Technical Picture
The S&P 500 has been trading in a recovery trend after bouncing from April lows, but the reacceleration in inflation introduces a new headwind. The index is trading above its 50-day moving average (~5,500), which is a positive sign, but momentum could stall if rate cut expectations continue to be pared back. The ASX 200 is similarly testing its 50-day moving average around 8,150, with financials like CBA and ANZ under pressure from a higher-for-longer rate narrative.
What Traders Are Watching
All eyes are on the 5,480 support level on the S&P 500 โ a break below this could trigger a sharper pullback toward 5,350. On the ASX, traders are watching whether CBA can hold above $168 and whether the broader index defends 8,100. Any further upside surprise in US inflation data will be a key trigger. Gold (XAU/USD) is also in focus, with support at $3,180 and resistance at $3,320 โ a flight-to-safety bid could emerge if equities sell off.
Bias
Bearish short-term โ With inflation reaccelerating and Fed rate cuts being pushed further out, rate-sensitive stocks on both Wall Street and the ASX face a tougher environment. Higher-for-longer rates pressure valuations, particularly in tech and financials.
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