London’s FTSE 100 today was goosed by US inflation finally showing signs it is markedly slowing down and may have even peaked.
The capital’s premier index climbed 1.08 per cent to 7,375.34 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, surged 3.9 per cent to 19,.377.24 points.
UK stocks got off to a decent start yesterday, but they were propelled higher by new figures from across the pond during early afternoon trading in London.
The US Labor Department said prices rose 0.4 per cent over the last month, much lower than analysts’ expectations. Encouragingly, core inflation, a measure of underlying price pressures in an economy, halved to 0.3 per cent in October.
Investors cheered the good news as it signalled the US Federal Reserve’s aggressive rate hike cycle is finally curbing inflation, raising the prospect of chair Jerome Powell and the rest of the federal open market committee easing off on rate hikes.
“European markets spent most of the day trading cautiously until this afternoon’s US CPI numbers for October unexpectedly came in well below expectations, falling to its lowest level since January,” Michael Hewson, chief market analyst CMC Markets UK, said.
US rates have climbed 375 basis points since March, the fastest tightening cycle since the 1980s.
Higher interest rates tend to weigh on stocks by making fixed income assets, such as bonds and currencies, more attractive. They also rein in investors’ present day company valuations.
The pound surged nearly three per cent against the US dollar.
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