• Wednesday, Oct 20, 2021
  • Last Update : 12:43 pm

Peak inflation?

  • Published at 05:56 pm August 12th, 2021
Macy's Department store in New York
People shop at Macy's Department store in New York City, US, March 11, 2019 Reuters

On Thursday markets looked set to take a breather, with both US and European stock futures flat or down slightly

A look at the day ahead from Tommy Wilkes.

Closely-anticipated US inflation figures are easing concerns about runaway price growth and helping US and global stocks notch up yet more record highs.

Wednesday's 0.5% reading for the consumer price index in July was the largest drop in month-to-month inflation in 15 months and has some investors starting to bet long-feared inflation on the back of pandemic-era stimulus may be peaking. US Treasury yields fell, erasing some of this month's surge.

The reading certainly eases pressure on the Federal Reserve by supporting its assertion than inflation rises are temporary and gives the central bank more time to decide when to taper asset purchases. It also gives ammunition to bulls determined to push stocks higher.

On Thursday markets looked set to take a breather, with both US and European stock futures flat or down slightly.

US 10-year Treasury yields held above 1.3% -- while inflation fears may be receding for now, the benchmark yield is still nearly 20 basis points higher than in early August.

Elsewhere, data showed that Britain's economy grew by a faster-than expected 1.0% in June, boosted by the huge services sector.

The mood in Asia, where stocks have underperformed US and European peers recently, was downbeat again after China said it would draft new laws on national security, technology innovation, monopolies and education, as well as in areas involving foreigners -- the latest regulatory crackdown.

Fears about the spread of the Covid-19 Delta variant in Asia have also sapped confidence, with stocks lower on Thursday.

In currency markets, the dollar recouped some of Wednesday's tumble after the lower inflation reading.

Oil prices mostly held gains from earlier in the week, with Brent firmly above $71 a barrel and US crude at $69.

In corporate news, German online takeaway food firm Delivery Hero raised its 2021 outlook after more than doubling quarterly revenues.

Aviva Investors said it would return at least 4 billion pounds ($5.5 billion) to shareholders after a rise in profits -- the latest European firm to return to buybacks.

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