Spreadex Market Update
US inflation sees biggest monthly gain in over 3 years, Dow Jones suffers under renewed rate hike chatter
As it was this morning inflation was the name of the game this afternoon; unlike the drab UK figure, however, the US number surpassed expectations to hit a 3 year-plus high of 0.4%. Add onto that a 3 month peak for the industrial production data (at 0.7% April’s figure was far higher than March’s downward revised -0.9%), an improving capacity utilization rate and a solid set of housing starts and some eager analysts were all of a sudden whispering about a potential June rate hike. And whilst next week’s Q1 GDP second estimate may well nip that chatter in the bud it was still bad news for the Dow Jones, the index slipping around 90 points after the bell.
Interestingly, however, the dollar didn’t receive the expected boost from those surprising inflation figures. Instead the pound, which had flagged following the UK’s own limp CPI reading, at points rose by half a percent, with the enthusiasm that greeted an ORB/Telegraph poll putting Vote Remain further ahead than it was last month outweighing the rise in American prices.
Whilst the pound rose the FTSE was hampered by the slide that followed the US open. The UK index is now left with a mere 5 point rise having been up ten times that amount around lunchtime, whilst the DAX and CAC were even worse, dropping 0.9% and 0.6% respectively having surged by over 1% at the start of the session.
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