Market report

US inflation at 40-year high | FTSE pushes ahead

US dollar increases (photo by Terry Murden)

The US saw a quickening in the pace of inflation to a 40-year high of 7%, as expected, but month-over-month price gains moderated between November and December. Energy prices fell from November, the first decline in months, and gasoline prices also declined.

Daniele Antonucci, chief economist & macro strategist at Quintet Private Bank, said: “The inflation spike has proven more enduring than initially hoped but, to us, it remains a spike nonetheless. It should moderate this year as energy inflation slows.

“While we do project central banks to hike interest rates and stop their net asset purchases, they’re responding differently to the inflation spike. At one end of the spectrum, the Fed is likely to hike rates three or even four times this year, and to continue its shallow hiking cycle in 2023-24. Net asset purchases should stop from April.

“While reinvesting in full for the time being. Eventually the US central bank may start shrinking its balance sheet.”

Mining giants helped push the FTSE 100 to its highest close in almost two years. The index ended the session 60.35 points ahead at 7,551.72. This is its highest since 24 January 2020, a day when the director general of the World Health Organisation called Covid an “emergency in China” which “has not yet become a global health emergency.”

The biggest risers today were Antofagasta, up 100.5p to 1,442.5p, BHP, up 101.5p to 2,375p, Anglo American, up 125.5p to 3,364.5p, Glencore, up 13.45p to 401.25p, and BP, up 11.85p to 336.6p.

Among others enjoying a good day was Sainsbury’s, up 3.2% after it said that profits will be better than expected thanks to food and drink sales spiking last month.

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