Proactive Investors -
- FTSE 100 stays above 7,600 level
- Wall Street rally to continue after jobless claims, GDP data
- UK government unveils green energy strategy and EV investment
Do mention inflation
The headline year-on-year inflation rate in Germany dropped to 7.4% in March, down from 8.7% in February and the lowest level since last summer, however, there are still no signs of any broader disinflationary trend outside energy and commodity prices
Economists at ING commented: "Today’s sharp drop in headline inflation will support all those who have always been advocating that the inflation surge in the entire eurozone is mainly a long but transitory energy price shock. If you believe this argument, today’s drop in headline inflation is the start of a longer disinflationary trend.
"As much as we sympathised with this view one or two years ago, inflation has, in the meantime, also become a demand-side issue, which has spread across the entire economy. The pass-through of higher input prices, though cooling in recent months, is still in full swing. Widening profit margins and wage increases are also fueling underlying inflationary pressure, not only in Germany but in the entire eurozone."
They added: "Available German regional components suggest that core inflation remains high. While energy price inflation continued to come down and was even negative for heating oil and fuel, food price inflation continued to increase. Inflation in most other components remained broadly unchanged. Given that energy consumption is more sensitive to price changes than food consumption, it currently makes more sense for the European Central Bank to only look at headline inflation that excludes energy but includes food prices when assessing underlying inflationary pressure.
"All this means is that just looking at the headline number is currently misleading; there are still few if any signs of any disinflationary process outside of energy and commodity prices."
US inflation still needs taming
The FTSE 100 index held firm as US stock futures remained positive following the release of US Q4 GDP data and the latest weekly initial jobless claims.
Ryan Brandham, head of Global Capital Markets, North America at Validus Risk Management, noted: “US Initial Jobless Claims came in at 198,000, slightly above consensus estimates of 195,000, and up from last week’s reading of 191,000. US GDP came in as expected, at 3.9%.
"These numbers are fairly in line with expectations, and the Fed will likely breathe a small sigh of relief on the uptick in claims from the last few weeks.
"At the margin, this will take some pressure off, but the strong GDP growth means inflation still needs to be tamed”.
Futures for the Dow Jones Industrial Average and those for the broader S&P 500 index both gained 0.6% and contracts for the Nasdaq-100 added 0.7%.
Around 2.10pm, the FTSE 100 index was 54 points, or 0.7% higher at 7,618, below the session peak of 7,638.49.
Some of the top risers and fallers on the junior market
Sanderson Design Group PLC (LON:SDG) saw its shares surge 8.3% higher to 130.5p after the luxury interior design and furnishings group revealed a “major” licensing agreement with J Sainsbury (OTC:JSAIY).
eEnergy plc shares continued to soar, adding another 30% to 4.3p following its impressive interim results earlier this week. Revenues were up 58% to £15.1mln for the period, with adjusted EBITDA up 87% to £1.5mln.
Trackwise Designs PLC (LON:TWD) slumped over 50% after the company warned payments from a recent contract win will be delayed.
The financial impact has yet to be quantified but funds from the contract were hoped to secure the group’s funding through to August 2023.
PipeHawk PLC (LON:PHWK) shares fell over 9% after it reported a fall in half-year turnover and profit.
The company said turnover in the six months ended 31 December 2022 fell 28% to £2.2mln (December 2021: £3.3mln), resulting in a widened pre-tax loss of £1.8mln (2021: loss of £457,000).
Orcadian Energy PLC (LON:ORCAO) shares fell 11% as the offshore oil junior’s half-year results statement highlighted a need for new capital.