The FTSE 100 carved out minor gains on Monday as markets awaited a raft of economic data this week. Global markets are bracing for the next update of inflation data from the United States and United Kingdom, as well as Eurozone GDP.
The FTSE 100 was 0.3% at 7,910 at the time of writing on Tuesday. S&P 500 futures were pointing to a fractionally higher open in the United States.
The inflation readings from the US and UK will have major implications for the respective central bank’s next moves on interest rates and promise to be market moving events.
“The FTSE 100 defied weak markets in Asia overnight and selling on Wall Street on Friday to trade higher on Monday morning as investors await key US and UK inflation data later this week,” said AJ Bell investment director Russ Mould.
“Back above the 7,900 mark and within striking distance of its recent all-time highs the index continues to build on its gains of recent months, but the confidence that remains is about as fragile as a fine china cup.”
CPI Inflation
The Bank of England recently predicted UK inflation would fall to 4% by the end of the year – a scenario which would permit longed-for easier monetary policy. Markets have began pricing in a slowing of hikes this year – if there are signs to the contrary, one would expect a period of market volatility.
Economists estimate UK CPI will fall to 10.2% from 10.5% previously when the data is reported by the ONS on Wednesday.
Before then, we will receive US CPI tomorrow which is expected to fall to 6.2% – dramatically lower than the 9.1% peak recorded last year.
UK Housebuilders
Deutsche Bank analysts have cut five UK housebuilders as they feel the recent strong rally in sector has sufficiently priced in improvement in the UK housing market outlook. Persimmon was cut to a sell and fell 2.7% in Monday’s trade.
Barratt Developments and Taylor Wimpey were cut to a hold and fell 1.6% and 2.4% respectively.
The engineering sector caught investors attention on Monday with Weir Group rising 2.6% with Spirax-Sarco and BAE Systems also among the top risers.