The main economic release from the UK this week has shown that the core price index has risen by 2.3% year-on-year for the second successive month. The release has boosted the pound which has risen in recent minutes, whilst the FTSE 100 has pulled off its highest level of the day after earlier posting its highest level of the month.
Inflation remains above target
Further evidence of rising inflation in the UK was provided this morning with the most widely viewed metric, the consumer price index (CPI), matching last month’s reading in coming in at the highest level since 2013. There has been a marked increase in this data point since the Brexit vote last summer, with the June release of +0.3% being beaten by progressively higher readings. In fact, only the November reading of +0.9% has shown any decrease on the prior number with a clear uptrend taking hold. One of the main side effects of an extremely accommodative monetary policy and sharp depreciation in the local currency is an increase in inflationary pressures and given BoE Governor Carney’s stated “limited tolerance” for above target inflation, we could see a hawkish shift amongst the central bank rate-setters in the not too distant future.
Gold miners rise
The best performing stock on the FTSE 100 this morning is Randgold Resources (LON:RRS), with the gold miner rising by just shy of 2%. This morning’s rise comes after a similar size decline on Monday as the stock continues to battle around its year-to-date highs. Fellow miners Rio Tinto PLC (LON:RIO) and Fresnillo (LON:FRES) are also gaining and driving the broader index higher. Airlines are also joining the move up with Easyjet (LON:EZJ) and BA parent, International Consolidated Airlines Group S.A. (LON:ICAG), showing decent gains. As far as the losers are concerned RBS (LON:RBS) resides at the foot of the index and is lower by an even 1% at the time of writing. Financial stocks in general are amongst the biggest laggards today with Barclays (LON:BARC), Lloyds (LON:LLOY) and Provident Financial (LON:PFG) also in negative territory. Some of the biggest US banks are set to report their latest results this week with hopes fading of a stellar set of earnings. Lenders have been amongst the best performing shares across the Atlantic during the “Trump rally” as a combination of less regulation and higher rates has led many investors to believe that margins will improve. The season kicks off on Thursday with JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC) all set to release results prior to the opening bell.