US inflation data mixed, DAX pushes to new highs

The most recent batch US data through a spanner in the works this Thursday after the morning had seen strong Eurozone figures.

After Janet Yellen’s testimony earlier in the week pushed inflation and job growth to the forefront of the interest rate debate, the latest US figures were hotly anticipated this afternoon. Jobless claims increased by more than expected, back above 300k for the second time this February; it will be interesting to see how much bearing this will have on the non-farm data next week, which has seen very strong figures, and even stronger revisions in the past 3 months.

The main even was the inflation data as CPI saw its biggest month by month decline since December 2008. However, core CPI went in the opposite direction, growing by more than was forecast for the first month of the year; the difference between the two figures reflects just how much the price of oil is dragging down inflation. This mixed news led to a flat open for the US markets; the dollar, on the other hand, ran rampant over the euro and the pound as it focused on the positive situation in regards to core CPI and durable goods orders.

The Eurozone remained firmly in the green as the day went on, with the DAX especially reaching brand new record highs, its habit of late, after its excellent unemployment data this morning. The region-wide strong data saw gains across the board, as investors revelled in a day where Greece could be pushed to the bottom of the agenda by genuinely good economic news. However, and there is always a however with the Eurozone, the Greek issue will be back on the table tomorrow, with the all-important parliamentary vote in Germany. The discontent in Germany over the likelihood that Syriza will satisfy the reform conditions that are such a key part of this extension is muddying what looked like a clear path to a Greek solution. The markets should expect another tense Friday until the potential extension actually becomes reality.

Finally, the FTSE could only maintain slender gains as it was stifled by the negative performance of key stocks. The bad day for the Royal Bank of Scotland got even worse when it was revealed that its private banking arm Coutts is being investigated along the same Swiss tax evasions lines as HSBC. Even the FTSE’s mining stocks, which are still posting gains, lost some of their lustre as copper fell further away from the $2.70 level it had touched this morning. Unlike the Dow or the DAX, the FTSE has struggled to capitalise on the highs it saw in the middle of the week due to its gains being inspired by non-UK news.