Spreadex Market Update
US markets flat ahead of important inflation data
After noted dove John Williams, head of the Federal Reserve Bank of San Francisco, ducked questions over the rate hike outlook in a speech last night, investors will be eager to note the direction of the USA’s inflation figure, which holds a key role in the interest rate debate. Inflation has stabilised at a growth rate of 0.2% in the past two months, but analysts are forecasting a decline to 0.1% for April.
With the dollar already suffering since mid-week, a lower inflation figure could, theoretically, bring with it both widening declines for the greenback alongside another record-breaking push from the Dow Jones. Almost equally important as this inflation figure will be Fed chair Janet Yellen’s speech before the Greater Providence Chamber of Commerce Economic Outlook this evening. Like Draghi in Europe, Yellen’s comments usually hold a powerful sway over the markets, something that could increase tonight dependent on what way the inflation figure turns out.
The news that the latest German Ifo business climate suggested a worsening environment in the country, however slight, compounded the weak morning for the DAX, sending it into the red and in danger of falling below 18000 once more. The rest of the region followed suit, with Greek PM Tsipras’s constant claims of optimism undermined by the bearish tone struck by Wolfgang Schauble yesterday and Angela Merkel today.
The FTSE’s morning push, which has seen the UK index reach its highest point in nearly 2 weeks, was aided by the news that public sector net borrowing had fallen faster than expected in the month of April. The FTSE’s biggest hurdle now will be to weather the sleepy trading environment that is likely to creep in as the day continues, with investors unwilling to carry too much risk into the Spring Bank Holiday weekend.
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