Markets Push Higher While Inflation Starts Creeping Back In

Markets continue to climb this week, despite inflation pressures beginning to quietly reappear underneath the surface. The US500 has continued its strong upward run, now trading comfortably above its 50-day moving average as investors chase optimism around global trade, technology and continued economic momentum.

Part of that confidence appears tied to Donald Trump’s latest push into China, with the former President travelling alongside several major US business leaders and CEOs in what looks increasingly like a large-scale relationship and trade positioning exercise ahead of the next US election cycle. While official details remain limited, markets are clearly interpreting the move as business-friendly and growth-focused, particularly for large multinational companies that rely heavily on manufacturing, technology and global supply chains connected to Asia.

At the same time though, US CPI data has started creeping higher again. Inflation is nowhere near the panic levels markets experienced several years ago, but the direction is beginning to matter. Investors are now finding themselves in an unusual environment where share markets continue pushing aggressively upward while inflation slowly attempts to rebuild underneath them.

Normally, stronger inflation data would create concern around future interest rates and place pressure on equities. Instead, markets appear to be taking the view that economic growth and corporate earnings can still outpace those inflation concerns, at least for now. Whether that confidence holds over the coming months may depend heavily on energy pricing, labour market conditions and how aggressive central banks choose to become if inflation continues rising.

Back in Australia, the Federal Budget is still being digested by both households and markets. The ASX200 has remained relatively flat compared to the explosive movement being seen in US markets, with investors appearing cautious around future taxation, housing policy changes and the ongoing pressure of elevated interest rates locally.

Australian consumers also remain in a very different position to many US investors. Mortgage stress, insurance costs, rent increases and general cost-of-living fatigue are still heavily affecting sentiment here, even while overseas markets continue reaching for new highs. The disconnect between Wall Street optimism and Australian household reality is becoming increasingly noticeable.

Gold has remained relatively steady throughout the week, continuing to mirror movements around its 50-day moving average without yet showing the same breakout strength silver delivered earlier this month. Silver continues to hold firmer positioning technically, while gold appears to still be waiting for either a stronger inflation catalyst or a larger geopolitical trigger before making a more decisive move higher.

For now, markets are balancing on a fairly fine line. Investors are celebrating growth, AI expansion and international deal-making, while inflation quietly taps away in the background reminding everyone that the economic story may not be completely under control just yet.

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Enjoy today’s charts 

Gold daily chart, with 50MDA

Silver daily chart, with 50MDA

US500, with 50MDA

ASX200, with 50MDA