U.S. consumer prices gain, leading to market selloff
Data released on Wednesday showed that consumer prices in the United States rose by their highest margin in 12-years.
Figures from the Labor Department showed that the consumer price index increased by 0.8% in April, after a 0.6% gain in March.
This was the largest gain since June 2009 and was led by a record 10.0% rise in prices of motor vehicles.
As inflation continues to rise, many now look to the Federal Reserve to take action, with Janet Yellen calling on the Fed to step in earlier this month.
Today’s data sent shockwaves throughout markets, with Gold jumping by over $20 in under an hour. All major U.S. indices were trading lower as a result. The Dow was down 1.99%, followed by the S&P 500 down 2.14% with the NASDAQ suffering the worst drop after falling 2.67% on the day.
Oil prices increase as middle-east tensions heighten
Oil prices surged in today’s session as tensions in the Middle-east rose, as battles between Israel and Palestinians continued.
Recent days have seen an escalation in the violence in Gaza, which in turn has led to energy prices rising, due to fears of a full scale war.
A member of the United Nations Tor Wennesland tweeted, “Stop the fire immediately. We’re escalating towards a full scale war”. With protests taking place around the globe in hopes of de-escalating the fighting.
In addition to this, the Energy Information Administration commented today that demand for oil could outpace the available supply.
The EIA stated that, “The anticipated supply growth through the rest of this year comes nowhere close to matching our forecast for significantly stronger demand beyond the second quarter”.
WTI rose to an intraday high of $66.63.
FTSE 100 rises on UK GDP data
London’s FTSE 100 rebounded on Wednesday as GDP data from the United Kingdom showed that economic recovery was ongoing.
Figures released today showed that Britain’s economy grew by 2.1% in March, which was better than the 1.3% growth expected.
This came prior to the opening of the British high street, but coincided with the reopening of schools, alongside a rise in COVID-19 vaccinations, which helped increase consumer spending.
In response to Wednesday’s data, Britain’s Finance Minister Rishi Sunak stated that, “Despite a difficult start to this year, economic growth in March is a promising sign of things to come“.
The Bank of England expects GDP to rise by 7.25% this year.
Quote of the day – “We want to perceive ourselves as winners, but successful traders are always focusing on their losses.”– Peter Borish
Senior Market Analyst