The European markets maintained a largely unruffled display of positivity this Wednesday – though a minor pullback from the morning’s highs may suggest a touch of the inflation jitters are creeping in.
The FTSE can feel pleased with itself that it has held above 7200 with a half a percent rise, investors continuing to ignore the hawkish timbre of yesterday’s UK inflation reading. The eurozone indices weren’t much different to the FTSE; the DAX was up 0.6%, but couldn’t sustain a foray beyond 12300, while the CAC rose 0.5%.
As for the pound, the currency continued to lose its way as the day went on. Its meagre growth against the dollar soon turned into a 0.2% decline, sending cable back towards $1.385, while against the euro it couldn’t shake a 0.1% drop, a shift that has taken the pound near a fresh 2018 low.
All this may be well and good – however, the day’s real test is still to come. It is going to be interesting to see how investors deal with the various US inflation readings this afternoon. While the headline figure is set to jump from 0.1% to 0.3%, the core number is expected to drop from 0.3% to 0.2%.
If the focus is on the former then the markets could be in store for another interest rate-fearing freak-out; if it’s on the latter then the global indices can breathe a (temporary) sigh of relief. Of course, this is without even considering whether or not these estimates will turn out to be accurate...
At present the Dow Jones doesn’t look too worried, with the futures pointing to a 130-ish point rise when the bell rings on Wall Street. That would leave the Dow not too far from 24800, its best price in around a week.
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