Following a stark – and arguably long-awaited – plunge in equities on Tuesday, Europe attempted to pick itself up on Wednesday.
The FTSE received an early helping hand thanks to a better than forecast Q1 GDP reading, showing the UK contracted by 1.5% in the lockdown-hit opening months to the year, compared to the -1.6% forecast.
A stronger sign of recovery was news that the economy actually grew by 2.1% in March, instead of the 1.5% expected, as the country cautiously started to open up. That’ll only boost hopes of a robust rebound in the second and third quarters.
The GDP news shot the FTSE to the top of the table after the bell, leaving the UK index 0.6% higher and around 15 points short of 7,000.
The DAX, meanwhile, added 0.4%, lurking just below 15,150, with the CAC up 0.3%, sticking a pinkie beyond 6,260.
These European gains should be caveated, however, as they all come before this afternoon’s US inflation reading for April has been unveiled. And given that Monday and Tuesday’s losses can in large part be explained by fears of surging inflationary pressures, the trading landscape could look very different once the figure has been released.
Estimates suggest the incoming numbers could ease investors’ concerns, as the headline figure is set to drop from 0.6% to 0.2% month-on-month.
Yet the Dow Jones still seems uneasy, with the futures at present suggesting a 0.2% decline. Again, that’ll likely change once the CPI readings are released.
One thing that may limit the ameliorating impact of Wednesday’s inflation data is that it won’t reflect May’s rocketing commodity prices, a principal reason behind the recent resurgence in investors’ fears.
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