The Dow Jones couldn’t quite decide what to do after the bell, oscillating between marginal gains and a 100 point-plus drop ahead of Jerome Powell’s Senate Finance Committee testimony.
There’s plenty of reason for the Dow to be in a bad mood, with most of the day’s US data on the hawkish end of the spectrum. The core PCE price index, a Fed-favourite inflation metric, rose from 0.2% to a higher than forecast 0.4%; the latest jobless claims figure hit its lowest level since December 1969; and though the Markit manufacturing PMI disappointed, the ISM reading smashed estimates to come in at a 5 month peak of 60.8.
The dollar, understandably, reacted well to all this. Against the pound it climbed 0.4%, forcing cable below $1.375 for the first time since mid-January, while against the euro it managed to rise 0.3%, sending the single currency to its own 7 week nadir.
The messy US open did nothing to ease the concerns of the European indices. The FTSE – which is not only dealing with the wider downturn in sentiment but a 10% decline from WPP (LON:WPP) and an increasingly sickly UK retail sector – fell 0.9%, hitting a 2 and a half week low of 7170. The DAX, meanwhile, plunged a whopping 1.8% to drop towards 12200, with the CAC down 1.1%.
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