The FTSE 100 has risen after UK inflation hit a 30-year high. Photo: Thomas Krych / SOAP Images / LightRocket via Getty
European stocks were mixed on Wednesday as global markets recovered, investors digested the latest UK inflation data and waited for the Spring statement of Finance Minister Rishi Sunak.
The FTSE 100 (^ FTSE) rose 0.3% after UK inflation hit a 30-year high as household budgets were further squeezed and the cost of living crisis worsened.
Elsewhere in Europe, France’s CAC (^ FCHI) fell 0.2% and DAX (^ GDAXI) fell 0.3% in Germany after closing at a three-week high on Tuesday.
UK consumer prices rose 6.2% in the year to February, above expectations of 6% and up from 5.5% last month, according to new data from the Office for National Statistics (ONS). This is the highest inflation rate since March 1992, with the monthly CPI rising 0.8%. This is the largest monthly CPI surge from January to February since the financial crisis.
Soaring energy prices, fuel costs and food prices were the biggest contributors to the surge in inflation. Electricity prices have risen 19.2% since April 2021. Gas prices rose 28.3% last year.
Meanwhile, the Retail Price Index reached its highest level in 31 years, reaching 8.2% in February.
read more: UK inflation reaches 6.2% ahead of Rishi Sunak’s spring statement
Bank of England economists had previously predicted that inflation could exceed 8% in April as Ofgem’s energy price cap rises 54% next month.
Analysts hope that central banks will mitigate inflation by taking a more “assertive” stance in raising interest rates.
“This is before the turmoil of commodities unleashed by the Ukrainian invasion fully appears in the numbers. Therefore, as inflation gets hotter, the Bank of England will take cold taps by raising interest rates more aggressively. I’ll try to turn it on. ” Susannah Streeter, Senior Investment and Market Analyst at Hargreaves Slan’s Down.
The UK’s latest economic data precedes the Spring statement of Great Britain’s Vassal Rishi Sunak on Monday afternoon in London. Snacks have vowed to “wait” for hard-working Britons and are expected to announce various steps to relieve the pain of inflation. The latest public sector borrowings have shown that snacks have room to move in small increments of around £ 26 billion ($ 34.4 billion) than originally expected in October.
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read more: Spring Statement: How Will UK Fuel Tariff Reductions Affect UK Gasoline and Diesel Prices?
Sterling (GBPUSD = X) fell 0.3% against the dollar to $ 1.3225 and remained almost unchanged at around 83.15p against the euro (GBPEUR = X).
Oil prices rose on Wednesday as US oil reserves declined during the Ukrainian crisis fueled market concerns about tightening global supply. According to the American Petroleum Institute, crude oil inventories fell by 4.3 million barrels last week.
Brent crude (BZ = F) rose 2.2% to $ 117.97 a barrel. At the time of writing, US light crude oil (CL = F) was up 1.8% to $ 111.22 in electronic trading on the New York Mercantile Exchange.
Brent crude rose 2.2% to $ 117.97 a barrel early in trading in London on Wednesday. Chart: Yahoo Finance UK
Beyond the pond, US benchmarks rose as investors’ concerns about a recession due to inflation diminished as investors expanded their rise last week.
Wall Street’s S & P 500 (^ GSPC) rose 50.43 points (1.1%) to 4511.61. Technology-intensive Nasdaq (^ IXIC) hit a month-long high, rising 2% as Apple (AAPL), Amazon (AMZN) and Netflix (NFLX) stocks all rose by more than 2%. Dow Jones (^ DJI) added 0.7% on Tuesday.
In the government bond market, the yield of the benchmark 10-year bond (^ TNX), which is inversely proportional to the price and supports the global borrowing cost, jumped to 2.4%, approaching the highest level since May 2019.
It was after Federal Reserve Chairman Jerome Powell made a more hawkish tone on Monday. Powell emphasized the uncertainty facing central banks and emphasized that the Fed will take a more restrictive stance as needed after raising interest rates from near zero last week.
“The relative indifference of the stock market to rising yields may be a recognition that there is still plenty of room to return the Fed’s interest rates from the pre-pandemic 1.5% to 1.75%,” said chief market Michael Hughson. Said. Analyst at CMC Markets.
“This may help explain why the May 50bps rise is being moderately affected by another rise of similar magnitude.”
European stocks soared as foreign markets joined Wall Street rallies. MSCI’s widest index of Asia Pacific equities, excluding Japan, rose 1.9%.
The Nikkei Stock Average (^ N225) rose 3% in Japan and Asian stocks turned green overnight. Meanwhile, Hong Kong’s Hang Seng Index (^ HSI) index rose 1.3% as China promised to support financial markets. Shanghai Composite (000001.SS) rose 0.3%.