FTSE 100 shrugs off inflation worries as oil giants rise, but US stocks under
Britain’s blue chip index closed more than 56 points higher, or 0.82% up, at 7,004 with oil giants among the top winners
- FTSE 100 closes ahead
- But US markets fall amid inflation fears
- UK GDP growth beats forecasts
5.03pm: FTSE closes ahead
FTSE 100 closed convincingly in the green on Wednesday but midcap FTSE 250 fared less well, while US stocks plunged amid the release of inflation numbers.
Britain’s blue chip index closed more than 56 points higher, or 0.82% up, at 7,004, with oil giants among the top winners as crude prices firmed.
FTSE 250, though, dropped 59 points, or 0.27%, at 22,107.
The US Consumer Price Index rise in April this year, at 4.2%, compared to a year earlier, was the sharpest since September, 2008. Economists had expected a jump of 3.6%.
On Wall Street, the Dow Jones shed over 371 points, or 1.08% to 33,898. The S&P 500 lost over 58 points at 4,094. The Nasdaq exchange fell 295 points at 13,094.
“The US CPI print has put the cat among the pigeons, as was to be expected, and opinions and market reaction is sharply divided,” noted Chris Beauchamp, chief market analyst at online trading group IG.
“There is enough for both sides of the debate in this update, a reflection of how sharply prices are increasing both year-on-year and month-on-month, and in the core and non-core versions.
“Clearly, one month’s print cannot be the transitory spike in prices that the Fed thinks will be the case, but nor is it obviously the beginning of a trend. We will only know with the benefit of hindsight, and the mixed and volatile reaction in stocks so far points towards this indecision.”
3.45pm: Crude price gains support UK market
The US inflation figures seem to have left the UK market remarkably unmoved, with investors taking more notice of the better than expected UK economic growth numbers.
Indeed the FTSE 100 is now 71.71 points or 1.03% higher at 7019.70, having hit a peak for the day of 7028.1.
A jump in oil prices – which ironically should raise the alarm for inflationary concerns – is providing some support.
With Brent crude up 1.85% at $69.82 a barrel after the International Energy Agency suggested demand would outstrip supply, () is the top riser in the blue chip index, 3.43% or 10.45p better at 315.05p.
PLC () is not far behind, up 2.79% or 38.2p at 1405.8p.
Positive trading updates have helped drinks giant (), up 3.37% or 107.5p to 3297.5p, and PLC (), 2.9% or 335p higher at 11,890p.
US markets however are less forgiving of the inflation data.
The Dow Jones Industrial Average is down 0.73%, the S&P 500 has lost 0.92% and the Nasdaq Composite has dropped 1.56%.
Neil Wilson at Markets.com said: “We can expect a series of hot prints this summer; the Fed has made it clear it will look past these as it thinks inflation will be transitory.
“We shall only really know if that is the case in a few months’ time. Until then expect gyrations as data shows strong inflation and growth, even if it’s largely predicted.”
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