Here’s a snapshot of things so far today:

• Eurostoxx +0.8%
• Germany DAX +0.4%
• France CAC 40 +0.8%
• UK FTSE -0.1%
• S&P 500 futures +0.6%
• Nasdaq futures +0.7%
• Dow futures +0.5%

It’s a solid rebound after dip buyers were dealt a blow late yesterday in US trading. The question now though is, can this carry on until the end of the day? A lesson to be heeded was that things also started brightly in European morning trade yesterday for stocks.

And this time around, there’s also the curveball from the US CPI report coming up later. The bulls will be hoping for that to carry the early optimism shown today. But as mentioned here, the risks aren’t all that balanced right now after the stuttering start to August trading for equities.

I would reserve caution on risk sentiment, especially if the inflation numbers later come in higher than estimated.

And in the bigger picture outlook, how will the latest run higher in oil prices factor in to the inflation equation? And what if oil prices continue to rise further amid tighter market conditions? There’s certainly a lot to ponder and surely it isn’t going to be a straightforward declining trend in inflation until next year. That would be too easy for central banks.

This article was written by Justin Low at www.forexlive.com.