Inflation data in focus as markets seek stability after tech selloff

Let's catch up on the market movements.

The week began with much activity, but European morning trade on Wednesday appears subdued. Traders are likely waiting for the US inflation report due later.

The consumer price index release is the key focus. Market participants are expected to stay cautious until the data is out, barring any unexpected news.

Economists forecast October's headline CPI to increase 0.3% month-on-month, a slowdown from September's 0.6%. Core CPI is seen rising 0.2% m/m, compared with 0.3% in the prior month.

A notable caveat applies to this release. The Bureau of Labor Statistics is skipping annual comparisons because October 2025 data was not collected during last year's government shutdown. This increases the importance of the monthly figures.

The key question is whether the inflation data will further boost market sentiment, particularly after technology stocks recovered from last week's decline.

The Nasdaq rose 2.7% and the S&P 500 added 2.3% on Tuesday, as risk appetite returned along with falling oil prices. Despite the rebound, worries about AI investment and regulation persist.

Therefore, the CPI report could be decisive in shifting sentiment.

A weaker-than-expected reading would likely calm equity markets, especially by reducing bets on a December Federal Reserve rate increase. Conversely, strong inflation could disrupt the budding recovery, pushing Treasury yields up and pressuring high-priced tech stocks.

For now, traders are expected to avoid aggressively extending the rebound until the inflation picture becomes clearer.

European markets are set for a quiet session, with the main action anticipated from the US data release.