European stocks and US futures wavered on Wednesday as UK inflation soared to a 41-year high in October, while prices showed further signs of abating in the world’s biggest economy.
The regional Stoxx Europe 600 fell 0.4 per cent in early trading. London’s FTSE rose 0.2 per cent after fresh data showed UK inflation accelerated to 11.1 per cent last month, up from 10.1 per cent in September. Core inflation, which excludes volatile food and energy prices, held steady at 6.5 per cent in October, the same rate as in September.
“It looks like UK headline inflation is at its peak,” said James Smith, economist at ING.
“The fact that the government is effectively fixing electricity [and] gas unit prices below wholesale costs until next April means this is probably as high as it will get, though admittedly we expect headline rates to stay in double-digits until at least February next year,” Smith added.
Contracts tracking Wall Street’s benchmark S&P 500 and the tech-heavy Nasdaq 100 both added 0.3 per cent.
US stocks climbed in the previous session after a report on Tuesday showed factory gate prices rose 0.2 per cent in October from September, less than the 0.4 per cent rise expected by economists polled by Bloomberg.
The slowdown in producer prices came after a report last week showed US consumer inflation was also easing. The annual rate of wholesale inflation landed at 8 per cent, down from 8.4 per cent in September.
October’s cooler than expected consumer price data sparked a sharp rise in the S&P and the Nasdaq Composite, as well as a decline for the US dollar, which had been on a tear for much of the year. The dollar index, which tracks the currency against a basket of six peers, was down 0.1 per cent early on Wednesday.
In government bond markets, the yield on the two-year Treasury note, which is particularly sensitive to interest rates, added 0.02 percentage points to 4.38 per cent. The yield on the benchmark 10-year US note also added 0.02 percentage points to 3.82 per cent. Yields rise when prices fall.
Asian equities fell on Wednesday after making strong gains earlier this week, as geopolitical tensions in Europe and rising Covid-19 cases in China hit markets.
Hong Kong’s Hang Seng index was down 0.5 per cent, China’s CSI 300 slipped 0.8 per cent and South Korea’s Kospi fell 0.1 per cent. Japan’s Topix was little changed.