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Traders Return to Data-Driven Strategies as Inflation Cools and Recession Fears Fade
Traders Return to Data-Driven Strategies as Inflation Cools and Recession Fears Fade
Alex Ridgers, StoneX Global Head of Retail Dealing, outlines the shift in market sentiment as inflation slows and economic fears ease across the US, UK and eurozone.
Key Takeaways
- Cooling inflation and easing recession fears are shifting market focus from shocks to fundamentals
- U.S. and eurozone show signs of stability while UK inflation remains more volatile
- Banking and automotive sectors offer early indicators of renewed investor interest
Market moving from shocks to fundamentals
Ridgers describes a clear transition in the markets, noting that the past 18 months resembled cryptocurrency trading more than equities. But now, with major headwinds passing, he sees traders returning to data-driven strategies and valuation-based investing.
Inflation trends across major economies
The U.S. CPI printed at 2.7%, which Ridgers describes as “not on target but close to”. He highlights how this stabilization strengthens Trump’s policy stance and diminishes pressure on the Fed. In the eurozone, inflation is on target at 2%, while in the UK, an unexpected rise was attributed to tax and wage increases. However, Ridgers points to wage growth trends indicating inflation should return to 2% by year-end.
Key data points and geopolitical considerations
Ridgers emphasizes upcoming U.S. retail sales and Michigan sentiment data, alongside recent Chinese economic releases. He notes the divergence between China’s strong industrial production (6.8%) and softer retail sales, saying “that’s got to be Chinese exports... I’m really hoping we see that again”. He also discusses how Powell’s future and Trump’s presence add uncertainty, comparing Powell to Schrödinger’s Cat.
Sectors and equities to watch
Beyond big tech, Ridgers is focused on banking and automotive sectors. U.S. banks are outperforming, and deregulation could support further gains. Meanwhile, the automotive sector, particularly Porsche, has seen steep declines. He views the upcoming earnings as a chance to “see if there’s a bit of value... a ray of light”.
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---- Written by Frederic Guetin, StoneX TV Producer
---- Expert: Alex Ridgers, StoneX Global Head of Retail Dealing
- Currencies
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