Wednesday's U.S. inflation report is at the top of the agenda for financial markets, given that the current turmoil is widely attributed to figures at the start of the month showing wage growth was accelerating faster than economists predicted.
Interestingly, benchmark indexes in other regions have fared worse than their U.S. peers during the sell-off.
One key measure used by technical analysts is the 200-day moving average. A move through that level may signal the reversal of a trend. And, on that basis, the rest of the world has more to fear from the current downturn in stock prices than the U.S.
European stocks have taken a beating, with the STOXX Europe 600 down more than 4 percent so far this year. That's driven the benchmark index to more than 3.5 percent below its 200-day moving average.
After dipping below its 200-day moving average in September and flirting with a second break at the end of last year, the benchmark European stock index is now firmly below the technical measure
The benchmark U.K. equity index has fared even worse, with the FTSE 100 Index losing more than 6 percent in 2018 and dropping below the technical level for a third time since September.
The benchmark U.K. stock index has declined below the technical measure
Japan's Nikkei 225 Stock Average breached its 200-day moving average in September, and then rallied strongly along with global equities. Recent moves, though, have taken it to a hair's breadth away from a second break.
Japan's equity benchmark is within touching distance
But the S&P 500 Index remains a far distance away from the key level on a closing basis -- even more so after the rally seen in the past three trading sessions. On an intraday level, the index dipped below the average briefly on Feb. 9, but swiftly rebounded.
The S&P is more than 4.5 percent above the technical level
And the Dow Jones Industrial Average has even more clear water between Tuesday's closing level and its 200-day moving average, and hasn't broken the trend line on an intraday basis.
The Dow is more than 7 percent above the measure
One inflation figure shouldn't become the be-all and end-all of risk appetite in the global market. But given the current heightened sensitivity of traders and investors, bruised by the recent market gyrations, Wednesday's number has the power to drive stocks and bonds for the foreseeable future -- or at least for the rest of this week.
To contact the author of this story:
Mark Gilbert in London at [email protected]
To contact the editor responsible for this story:
Edward Evans at [email protected]