US inflation data ‘a welcome shot in the arm’ for international stocks
The FTSE 100 was up by 1.08%, or 79.09 points, to 7,375.34.
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Your support makes all the difference.European and American stocks surged on Thursday as investors cheered a milder US inflation reading and as the nation edges towards an election result.
The S&P 500 soared by around 4.7% and the Dow Jones was up by 3% in early trading as the US’s consumer prices inflation (CPI) rate showed the lowest annual increase since January, despite hitting 7.7% in October.
But investors may be hopeful that the world’s biggest economy has seen the worst of the crisis and that prices will start to ease.
US inflation data has provided a welcome shot in the arm for markets, with the declines seen across both headline and core inflation bringing the kind of optimism that has been lacking
The upbeat mood had a ripple effect in Europe, where stocks were trading significantly higher on Thursday afternoon.
The FTSE 100 was up by 1.08%, or 79.09 points, to 7,375.34, pushed up by a strong performance for asset management firms.
German stocks also enjoyed a surge, and the Dax jumped by 3.51% when markets closed, while the French Cac was up by 1.96%.
Joshua Mahony, senior market analyst at online trading platform IG, said: “US inflation data has provided a welcome shot in the arm for markets, with the declines seen across both headline and core inflation bringing the kind of optimism that has been lacking without seeing non-energy related inflation turn lower.
“The impact of today’s inflation data has been further accentuated by comments from Fed members Harker and Logan, who see the pace of rate hikes slowing over the coming meetings.
“Markets are now pricing a 73% chance of a 50 basis point hike in December, coming off the back of four consecutive 75 basis point moves from the Fed.
“Quite whether that slowdown in tightening will be enough to maintain a prolonged period of upside for stocks remains to be seen.
“However, today’s data has certainly lifted hopes of a festive end to the year for investors.”
Meanwhile, the pound nearly hit a two-month high against the US dollar on Wednesday afternoon. It was up by 2.8% to 1.168 dollars – almost reaching the 1.169 dollars seen on September 13.
Sterling was also up by 1.2% against the euro, at 1.1475 euros.
In company news, Domino’s Pizza said it was looking forward to its busiest weeks of the year as the men’s football World Cup and festive season approach.
The takeaway giant reported its sales fell nearly a 10th in the latest quarter, but that was caused by the end of the temporary VAT rate reduction. Shares in Domino’s were up by 5%.
Retailer WH Smith said it has swung back to profit thanks to a travel rebound and resurgence in the high street.
The FTSE 250-listed firm saw its shares move higher after posting headline pre-tax profits of £61 million for the latest financial year, against £104 million in losses the previous year.
Its share price was 5.1% higher at the end of the day.
Energy giant Centrica also enjoyed a share price boost after telling shareholders its full-year earnings per share would be towards the top end of analysts’ expectations.
Its share price jumped by 7.4% on Thursday.
The biggest risers on the FTSE 100 were Convatec Group, up 19p to 230.8p, Segro, up 66.8p to 857.8p, JD Sports, up 8.9p to 116.35p, Intermediate Capital Group, up 93.5p to 1,230.5p.
The biggest fallers on the FTSE 100 were B&M European Value Retail, down 16.9p to 357.2p, Rolls-Royce Holdings, down 2.66p to 85.96p, BAE Systems, down 23.6p to 777p, Shell, down 68.5p to 2,315p, and Imperial Brands, down 60p to 2,093p.