S&P 500 nears record high on inflation data
The benchmark S&P 500 index was on the cusp of a new all-time high on Thursday as inflation data from the United States was released.
Figures which were reported by the Labor Department showed that Consumer Prices had risen at their fastest pace since 2008.
As inflation continues to increase post pandemic. It was reported that the consumer price index, which includes food and energy, prices rose 5% from a year earlier.
This comes as markets were expecting an annual gain of 4.7%. However today’s rise represents the biggest increase since August 2008, when the CPI rose by 5.3%.
Inflation data accompanied initial Jobless Claims which came in at 376,000 vs. 370,000 expected and cemented 6 straight weeks of declines in applications for unemployment benefits.
As of writing the S&P 500 was up 0.50% while the NASDAQ had risen 0.72%
ECB keeps interest rates unchanged
Moving over to Europe, the European Central Bank today decided to keep interest rates unchanged despite its own inflation concerns.
ECB President Christine Lagarde also announced that the Bank will continue its commitment to purchasing €1.85 trillion of bonds until March 2022.
Regarding inflation Lagarde stated that. “Inflation has picked up over recent months, largely on account of base effects, transitory factors and an increase in energy prices. It is expected to rise further in the second half of the year, before declining as temporary factors fade out”.
In addition to this, the ECB also revised its growth forecast for the continent. And now expects GDP of 4.6% for 2021 and 4.7% for 2022.
Despite this both the DAX 30, and CAC 40 traded marginally lower today.
FTSE 100 gains despite UK/EU trade disagreement
On the other side of the Spectrum, the UK’s FTSE 100 closed today’s trading session higher despite ongoing disputes with the EU.
The dispute which has been labelled the “sausage war” stems from the movement of frozen meats from Britain into Northern Ireland.
This was one of the major sticking points during Brexit negotiations, as Northern Ireland borders both the UK, and the Republic of Ireland, which remains in the EU.
Britain now wants to extend a grace period allowing for the movement of these goods. Whilst the EU has threatened legal action.
All of this comes as the G7 summit commenced today in the town of Cornwall in the United Kingdom. Where the UK seeks further trade deals with other global powerhouses.
The FTSE 100 closed 0.10% higher.
Quote of the day – “It’s not whether you’re right or wrong that’s important, it’s how much money you make when you’re right and how much you lose when you’re wrong.”– George Soros
Senior Market Analyst