London: Higher than expected increase US wholesale price On Friday, concerns arose again about its timing interest rate cut And halted Wall Street’s recent rally.
Markets were scared after US data released on Tuesday consumer price inflation It was slower than expected in January, dealing a blow to hopes of an early interest rate cut. US Federal Reserve,
This led to a sharp correction in equities, data showed a bigger than expected decline of 0.8 percent Retail Sales Reassuring markets for January US economy It is not very hot.
But data released Friday showed the 0.3 monthly rise in U.S. wholesale prices in January was more than the 0.1 percent gain expected by analysts, and compared with a 0.1 percent decline in December.
Excluding volatile food and energy prices, the gain was 0.6 percent in January and 2.6 percent for the year.
“Whether the market wants to dismiss this report as a function of seasonal adjustment factors, the truth of the matter is that the Fed will not dismiss it, and will see it as a reason to remain patient with regard to cutting rates. ” said Briefing.com analyst Patrick O’Hare.
Investors apparently did not dismiss the report, with Wall Street’s main indexes sliding down.
This helped the dollar rise against its major rival currencies, although it quickly gave up its gains against the euro, while the prospect of a longer-term hold on interest rate cuts by the Fed also pushed US bond yields higher. .
But James Reilly of Capital Economics said he believes the market’s focus on the consumer is misplaced. wholesale price index Because the Fed is likely to pay more attention to the PCE index, which is still moving toward its 2 percent target.
“As investors get closer to our view and the Fed cuts rates, we think the dollar will hand back some of its recent strength,” he said.
While Capital Economics does not expect the Fed to cut rates before May, Reilly said strong demand for US stocks could support demand for the dollar.
“Therefore, we would not be surprised if the greenback continues to move higher for some more time,” he said.
European shares rose on Friday, with Frankfurt and Paris hitting higher record peaks after solid Asian gains as investors ignored slowdowns in Britain and Japan.
London shares also rose as investors took comfort from a surge in British retail sales in January, a day after disappointing news that Britain was entering recession.
Official data showed Britain’s retail sales rose 3.4 percent in January, the fastest rise in almost three years, after a 3.3 percent decline in December.
Sentiment was also boosted by a jump in annual net profit at NatWest, which sent the UK bank’s share price rising by more than seven percent.
In Asia, Tokyo’s Nikkei index closed at a new 34-year high, partly supported by a Wall Street rally on Wednesday and Thursday, including in tech stocks.
Japan also entered recession in late 2023, according to data released on Thursday, with the Asian nation overtaking Germany to become the world’s third-largest economy.
Markets were scared after US data released on Tuesday consumer price inflation It was slower than expected in January, dealing a blow to hopes of an early interest rate cut. US Federal Reserve,
This led to a sharp correction in equities, data showed a bigger than expected decline of 0.8 percent Retail Sales Reassuring markets for January US economy It is not very hot.
But data released Friday showed the 0.3 monthly rise in U.S. wholesale prices in January was more than the 0.1 percent gain expected by analysts, and compared with a 0.1 percent decline in December.
Excluding volatile food and energy prices, the gain was 0.6 percent in January and 2.6 percent for the year.
“Whether the market wants to dismiss this report as a function of seasonal adjustment factors, the truth of the matter is that the Fed will not dismiss it, and will see it as a reason to remain patient with regard to cutting rates. ” said Briefing.com analyst Patrick O’Hare.
Investors apparently did not dismiss the report, with Wall Street’s main indexes sliding down.
This helped the dollar rise against its major rival currencies, although it quickly gave up its gains against the euro, while the prospect of a longer-term hold on interest rate cuts by the Fed also pushed US bond yields higher. .
But James Reilly of Capital Economics said he believes the market’s focus on the consumer is misplaced. wholesale price index Because the Fed is likely to pay more attention to the PCE index, which is still moving toward its 2 percent target.
“As investors get closer to our view and the Fed cuts rates, we think the dollar will hand back some of its recent strength,” he said.
While Capital Economics does not expect the Fed to cut rates before May, Reilly said strong demand for US stocks could support demand for the dollar.
“Therefore, we would not be surprised if the greenback continues to move higher for some more time,” he said.
European shares rose on Friday, with Frankfurt and Paris hitting higher record peaks after solid Asian gains as investors ignored slowdowns in Britain and Japan.
London shares also rose as investors took comfort from a surge in British retail sales in January, a day after disappointing news that Britain was entering recession.
Official data showed Britain’s retail sales rose 3.4 percent in January, the fastest rise in almost three years, after a 3.3 percent decline in December.
Sentiment was also boosted by a jump in annual net profit at NatWest, which sent the UK bank’s share price rising by more than seven percent.
In Asia, Tokyo’s Nikkei index closed at a new 34-year high, partly supported by a Wall Street rally on Wednesday and Thursday, including in tech stocks.
Japan also entered recession in late 2023, according to data released on Thursday, with the Asian nation overtaking Germany to become the world’s third-largest economy.
