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Stock markets mostly rose Wednesday as UK inflation slowed more than expected in June and investors grew increasingly optimistic that the US Federal Reserve would soon end its interest-rate hiking cycle. online news
London surged 1.8 percent in afternoon deals, boosted additionally by data showing UK annual inflation dropped under eight percent last month.
“Investors are taking the view that if inflation is on a sustained downward path, then the Bank of England might be less eager to keep pushing up interest rates,” Danni Hewson, head of financial analysis at AJ Bell, said following the British update.
“The market is desperate for that pivot moment where central banks call the end to the current rate-rise cycle.”
With analysts expecting the Bank of England to now hike less aggressively than thought in the coming months, the pound slumped Wednesday versus the dollar and euro.
“Inflation is now much lower than at the start of the year, but June’s (inflation) reading is still considerably higher than the Bank of England’s two-percent target.
“That means further rate hikes cannot be ruled out,” Hewson added.
Wall Street opened higher with all three main indices hovering at 52-week highs.
Equities have been on a tear since data last week showed US inflation continued to fall towards the Fed’s target of two-percent inflation.
Other indicators pointed to a US economy that was slowing but still in good health, sparking hope that the Fed is close to ending its rate-hike campaign without having sparked a recession.
Reinforcing that view, readings on Tuesday showed retail sales rose less than expected in June, though that was offset by an upward revision for May, while industrial output also came in slightly below estimates.
Data out Wednesday showed US housing starts fell last month, although by less than expected by economists.
“The key takeaway from the report is that higher financing costs are creating headwinds for builders,” said analyst Patrick O’Hare at Briefing.com, in another indication that the Fed’s hikes are having an impact on the real economy.
Markets were looking ahead to the Fed’s policy meeting next week.
The central bank is expected to hike rates once again, though the focus will be on its guidance for the future, with analysts debating whether it will pause or announce one more increase to borrowing costs this year.
Elsewhere, oil prices rose on supply concerns, with Brent pushing back above $80 per barrel.
The move higher is “likely a delayed response to Saudi Arabia’s voluntary production cut amid signs that Moscow finally appears to make good on its pledge to cut supply to international markets,” said Stephen Innes, managing partner at SPI Asset Management.
Key figures around 1330 GMT
New York – Dow: UP 0.3 percent at 35,070.11 points
London – FTSE 100: UP 1.8 percent at 7,587.97
Frankfurt – DAX: DOWN less than 0.1 percent at 16,113.81
Paris – CAC 40: UP 0.2 percent at 7,335.19
EURO STOXX 50: UP FLAT at 4,368.68
Tokyo – Nikkei 225: UP 1.2 percent at 32,896.03 (close)
Hong Kong – Hang Seng Index: DOWN 0.3 percent at 18,952.31 (close)
Shanghai – Composite: FLAT at 3,198.84 (close)
Pound/dollar: DOWN at $1.2901 from $1.3040
Euro/pound: UP at 86.91 pence from 86.13 pence
Euro/dollar: DOWN at $1.1217 from $1.1235 on Tuesday
Dollar/yen: UP at 139.67 yen from 138.87 yen
Brent North Sea crude: UP 0.9 percent at $80.36 per barrel
West Texas Intermediate: UP 0.7 percent at $76.29 per barrel
burs-rl/lth
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