Spreadex Market Update
Slight increase in UK inflation sees sterling soar against euro and dollar
Even though inflation only saw a mild increase, from the expected zero to 0.1%, coupled with a core CPI improvement from 0.8% to 1.2% if was more than enough to boost the pound, which jumped against the euro and the dollar following the release of the figures. It also lends credence to the increasingly hawkish position of the Bank of England, even if 0.1% is a far cry from the 2% inflation target set by the central bank.
Whilst sterling soared the FTSE only widened its losses as the morning went on. The Asian session’s Chinese volatility continued to weigh on the commodities, with Brent Crude at $48.50 per barrel and copper hitting fresh 6 year lows; this meant the FTSE’s oil and mining stocks returned to a uniform shade of red, with index dragging losses for BP, Shell and Rio Tinto.
For all the furore that surrounded Greece in the first 6 months of the year the renewed commodity collapse, coupled with the potentially wide-reaching problems in China, have meant that just as the saga is set to come to a successful crescendo the markets have stopped caring. This meant that, despite all signs pointing to the passing of the third bailout, the DAX and CAC slipped into the read as Tuesday continued.
Despite the dollar taking a bit of a battering from the pound, the US futures couldn’t muster the energy to post any gains this morning. It’s doubtful things will change this afternoon, if the USA’s slate of data is anything to go by; building permits and housing starts are at the bottom end of rate hike relevant, market moving figures and unless there is something spectacular in either number investors are unlikely to care.
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