Today's consumer sentiment figures could surprise the market

Yesterday's inflation numbers were slightly ahead of expectations but showed a continued decline. Today's consumer sentiment provides scope to surprise the market. At the back of every investors mind is the escalation in the Middle East and the possible bombing by Israel of Iranian oil assets and the fallout that this would create as the Israeli retaliation rhetoric is rising..

The US Indices were all marginally down Thursday following the CPI data showing softer inflation albeit marginally ahead of expectations, wild swings in Chinese stocks continues to distort the market. The Mag7 was flat on the day. The VIX was flat at 21. The main indices were; DJIA -0.14%, S&P 500 -0.21% and Nasdaq -0.05% (Mag7 -0.02%). On an equal weighted basis (our measure) the overall market was -0.25%. Breadth was fair at 58% (range of 12% to 88% over the last six weeks) volumes were fair at 8.4b (the average daily volume over the last year of 7.8b). The market was down even though breadth was >50% due to large negative swings in the price of a large number of Chinese stocks 

One day returns as follows - equal weight basis: Mag7 -0.02% (NVDA +1.6%, AAPL +0.8%, AMZN +1.3%, TSLA -1%), large cap -0.18%, medium cap -0.25%, small cap -0.14% and micro cap -0.34%. On a 1 and 2 week equal weight basis respectively; Market +0.1% and -1.5%, Mag7 +1.5% and -0.1%, Large caps +0.4% and +0.3%, Medium cap +0.5% and flat, Small cap flat and -0.7% and finally Micro cap flat and -0.7%. 

Our risk monitor remains in favour of the larger cap stocks. Small and Micro stocks have proved far more volatile than the Large and Medium cap stocks over the last seven weeks. Micro caps have underperformed the market by 18% over the last 12 months.

The sector bias favoured the Bear sectors on Thursday. Academic & Educational was the worst performer again yesterday after a very strong run recently. Basic Materials was the strongest sector pushed up by Gold +3.3%, Silver +2.9%, Copper +2.4% and Aluminium +1.4%. Reinsurance and Property were both up around 1% on the day helping to support Financials - possibly on early comments that hurricane Milton was less severe than feared. Consumer non-Cyclicals ended the day flat, there was continued markets comments regarding WW International (WW) and GLP-1 helped push that stock strongly ahead on the day again. Fintech including Blockchain was weak again in the Tech sector though Communications & Networking and IT Services were both strongly up.

A notable number of 52 week highs in the following sectors: Consumer Cyclicals (Hotels & Entertainment), Financials (across the sector), Industrials (across the sector ex Transport) and Technology (Software & IT Services and Technology Equipment again).

Notable high volumes in Consumer Cyclicals (across the sector again), Industrials (across the sector) and Technology (Software & IT Services again)