The FTSE 100 and European stocks managed to make gains this session, as inflation across the single currency block dropped to 10% in the year to November and investors await a speech from Fed chair Jerome Powell.
“In terms of global performance, the FTSE 100 continues to punch above its weight, as investors seek the cover of an established index driven largely by mature companies with an element of defensiveness. The strength of the US dollar has improved earnings numbers on repatriation, there is an average dividend yield of 3.7% and some overseas buying interest has left the premier index ahead by 2.3% in the year to date. In early exchanges, broker upgrades lifted the likes of Melrose (MRO.L), Rolls-Royce (RR.L) and BAE Systems (BA.L),” Richard Hunter, head of markets at Interactive Investor, said.
“The same cannot be said of the FTSE 250, however, where a decline of 18% so far this year is a reflection of the parlous state of the UK economy at present. This index has failed to capture the attention of investors, given its domestic focus, with any immediate positive catalysts few and far between,” he added.
Luxury handbag maker Mulberry (MUL.L) swung to a half-year loss as it revealed sales plunged by 10% across the UK as the economic uncertainty and cost-of-living crisis knocked shopper confidence. Shares were down 10%.
On Wall Street, stocks were mostly flat as traders awaited the US Federal Reserve chair's speech on the outlook for the US economy and the labour market.
Hargreaves Lansdown senior analyst Susannah Streeter said: “Although super-sized rate hikes appear to be in the rear-view mirror, an increase of 0.5% is still expected in December with the tightening cycle considered to be far from complete.
“The big worry among central bankers is that if economic pain isn’t inflicted now, inflation will be much harder to tame over the longer term.”
In Europe, euro area annual inflation fell to 10.0% in November, down from 10.6% in October according to a flash estimate from the Eurostat.
Euro area #inflation at 10.0% in November 2022, down from 10.6% in October. Components: energy +34.9%, food, alcohol & tobacco +13.6%, other goods +6.1%, services +4.2% - flash estimate https://t.co/3Iezb5Glwi pic.twitter.com/9fH6JMPrM9
— EU_Eurostat (@EU_Eurostat) November 30, 2022
With eurozone inflation lower than had been expected, attention has turned to what the European Central Bank will do about interest rates next month.
Eurozone #inflation slowed for 1st time in 1.5yrs in sign of hope for ECB. Nov CPI dropped to 10% from 10.6% in Oct while Core CPI remained steady at 5%. Money markets are pricing ~56bps of rate hike in Dec. https://t.co/h0muVh9tL6 pic.twitter.com/0D9yZak5RQ
— Holger Zschaepitz (@Schuldensuehner) November 30, 2022
Meanwhile, Brent crude (BZ=F) has climbed to $85/barrel, as analysts bid on hopes for a loosening of Chinese restrictions which could lead to renewed demand.
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