The FTSE 100 rose on Thursday despite US CPI inflation exceeding expectations in the year to September.
US CPI inflation held steady at 3.7% in September and although it was higher than economists had expected, monthly inflation fell to 0.4%.
The US inflation read did little to knock investor confidence in London on Thursday as BP and Shell rose on higher oil prices helping support the FTSE 100.
US interest rates
A raft of recent comments from US central bankers suggested rates would hold steady in the short term and today’s reading will cloud the outlook for investors. US stocks fell in the immediate reaction.
“US inflation has come in a little higher than expected, leaving the path of interest rates unclear. Headline inflation decelerated to 0.4% from 0.6% in September (on a monthly basis), slightly ahead of consensus expectations of a 0.3% increase,” said Richard Flax, Chief Investment Officer at Moneyfarm.
“Core inflation, which is the important metric followed by the Fed, remained unmoved at 0.3% month on month. Annual headline inflation came out at 3.7% against an expectation of 3.6%. Following recent comments from Fed governors, market-based indicators implied no rate increase at the next meeting. This report suggests that the decision may be more finely balanced than market pricing might suggest.”
The FTSE 100 closed 0.3% higher while US stocks were treading water.
BP was the top gainer adding 3%.