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Stocks mixed as European inflation holds and US inflation inches up

How major markets are performing on Thursday

President of European Central Bank Christine Lagarde speaks during a press conference in Frankfurt, Germany, Thursday, July 27, 2023, after a meeting of the ECB's governing council. (AP Photo/Michael Probst)
President of European Central Bank Christine Lagarde: European markets were looking to the bloc's inflation reading for a steer on whether or not the central bank would look to raise rates further. Photo: Michael Probst/AP

Markets across the US and Europe were mixed on Thursday as EU and US published fresh inflation data.

The FTSE 100 (^FTSE) fell 0.2% by the close, while the Dax (^GDAXI) in Germany rose 0.8% and the Cac (^FCHI) in Paris lost ground by about 0.3%. European markets were looking to the bloc's inflation reading for a steer on whether or not the central bank would look to raise rates further. The reading came in at 5.3%, slightly higher than anticipated but matching July's reading.

Higher inflation could give the central bank more ammunition to raise rates.

In the US, the Federal Reserve's preferred inflation measure edged higher in July, reversing some of the prior month's sharp drop as the central bank works to bring inflation back to its 2% target.

The Personal Consumption Expenditures (PCE) Index excluding the cost of food and energy, or so-called "core" PCE, rose 4.2% over the prior year in July, in line with economist expectations and up from 4.1% in June, data released by the Commerce Department on Thursday showed.

Meanwhile in the UK, Lloyds Bank's data showed the highest level of consumer confidence since Russia's invasion of Ukraine last year in the UK.

Economic optimism has rebounded due to the fact the Bank of England only raising rates by 25bps, rather than the expected 50, the bank said.

The August survey was conducted between August 1 and August 15, with most responses taken after the BoE’s decision.

The survey also revealed that half of companies expect to increase headcount this year, with pay expectations remaining strong. Pay increases have been linked to overall inflation.

Read more: UK mortgage approvals fall to lowest in five months as interest rate hikes take toll

Over in the US, stocks were positive in early trade, with the S&P 500 (^GSPC) up 0.2%, the Dow (^DJI) rising 0.5% and the Nasdaq (^IXIC) almost flat.

Live coverage is over
  • Lucy Harley-mckeown

    That's all from me for today, keep up with what's going on this afternoon on Yahoo Finance's US site.

  • Lucy Harley-mckeown

    Here's Chris Beauchamp from IG on oil prices:

    “There is a spectre at the feast, however. While investors are more confident about the global outlook, this means they are more optimistic on oil demand too. The commodity has climbed over the last week, and leaves open the possibility of a revival in inflation later in the year. Higher prices and a return to rate hikes could yet spell major trouble for the rally in stocks.”

  • Lucy Harley-mckeown

    And here's our take on the inflation news. Enjoy.

  • Lucy Harley-mckeown

    Chart: Yahoo Finance UK

    Markets not panicking on the news... FTSE in the red again, though.

  • Lucy Harley-mckeown

    We have a full update coming on the Eurozone inflation figures, but the headline stats suggest services inflation is proving sticky, while the heat has come out of energy markets (forgive the pun).

  • Lucy Harley-mckeown

    Eurozone inflation has come in at higher than expected, with the CPI at 5.3%, rather than 5.1%.

    This will increase bets of a bloc-wide rate rise. 5.3% matches the last reading.

  • Lucy Harley-mckeown

    Glencore (GLEN.L) is the top faller in a subdued FTSE today. Three weeks ago it was revealed that the miner's profits have been halved due to falling commodity prices. Now, it's investors are seeking damages over what they described as "untrue statements" in prospectuses, per the FT.

    Stock is down 4.5% as of 9.50am London time.

  • Lucy Harley-mckeown

    The Dax in Germany is heading higher on these figures, by the looks of it. Up 0.5% now:

  • Lucy Harley-mckeown

    Overnight in the US and Asia

    Asian stock markets were mixed by the end of Thursday's session, as Japanese factory activity and data from growth in the Chinese service industry were weaker.

    The Nikkei (^N225) rose even as factory activity shrank 2% in Japan in July from the previous month. Meanwhile Hong Kong's Hang Seng (^HSI) lost 0.5% and the SSE Composite (000001.SS) was down 0.5%.

    US stocks meanwhile finished Wednesday's session on a positive note, with the S&P 500 (^GSPC) rising 0.4%, the Dow (^DJI) up 0.1% and the Nasdaq (^IXIC) gaining 0.5%.

    Analysts have said the market in the US is facing a "goldilocks moment" as traders guess what rate path the Federal Reserve might take in the face of inflation.

  • Lucy Harley-mckeown

    Good morning! It's another (relatively) chilly August day in London and it was a mixed night for markets around the world, too.

    In Europe we're looking to the EU inflation print later and will be covering that as soon as it drops, so watch this space. Otherwise the agenda is very August-y.

    Let's get to it.

Watch: Positive signs for UK economy as consumer confidence on the up again

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