The FTSE 100 (FTSE), European, and US markets increased on Friday as a result of new data that revealed US inflation was falling and the UK’s GDP had expanded in Q2.
By the afternoon, the DAX (GDAXI) in Germany had risen 1.1%, the CAC (FCHI) in France had up 1%, and London’s top index had risen 0.5%.
The S&P 500 (GSPC), the Dow (DJI), and the tech-heavy Nasdaq (IXIC) all rose in early trade as US stocks followed Europe’s stock market gains higher. The two most popular Nasdaq stocks on Friday were Zscaler (ZS) and Datadog (DDOG).
August was the weakest rate of price growth since September 2021 according to the Federal Reserve’s favoured inflation gauge, which is another indication that the period of high central bank interest rates may be gradually drawing to an end.
In accordance with forecasts, the Personal Consumption Expenditures (PCE) Index increased from 3.4% in July to 3.5% in August. “Core” PCE, which excludes the erratic food and energy categories, rose 3.9%, down from 4.1% the previous month and in line with forecasts made by economists polled by Bloomberg.
Core PCE increased by 0.1% on a monthly basis in August, down from 0.2% in July.
In other news, the eurozone’s consumer price inflation data for September came in at 4.3%, down from the previously reported estimate of 5.2% and below the expected 4.5%. Contrary to expectations, core inflation came in at 4.5% instead of 4.8%. Since October of 2021, the inflation rate hasn’t been this low.
According to newly released data, the UK’s economy expanded by 0.2% in the second quarter, with a 1.2% increase in GDP coming from the production sector as a result of falling input prices.
These results were in line with forecasts and came after the first quarter’s growth was revised up from 0.1% to 0.3%.
By the afternoon, the more locally-focused FTSE 250 (FTMC) had increased by roughly 1.5%, while the pound was trading at $1.22 with a flat GBPUSD=X rate. Following the most recent inflation statistics, the dollar increased.
“We know that the British economy recovered from the pandemic faster than anyone previously thought, and data out today once again proves the doubters wrong,” said chancellor Jeremy Hunt.
“We recovered from the pandemic among the G7’s quickest, and since 2020, our growth rate has surpassed that of France and Germany.”
The IMF (International Monetary Fund) projects that we will grow more than Germany, France, and Italy over the long run, so sticking to our aim to halve inflation this year is the best way to maintain this growth, he continued.
Recently, a new FCA report on revising leasehold regulations for insurance in the home sector was released. What they said was as follows:
Beginning in the new year, insurance companies will be obligated to act in leaseholders’ best interests, consider leaseholders when developing goods, and forbid the recommendation of an insurance policy based on commission or remuneration levels.
Additionally, insurers will be required to make sure that leaseholders receive fair value from their insurance coverage and to offer critical information about their plans and pricing, including specifics about any commissions paid.
Following a study of the multi-occupancy buildings insurance market, the FCA took action after discovering that the cost of leasehold buildings insurance had increased dramatically since the Grenfell catastrophe.
The pound saw a 0.3% increase against the US dollar on Friday morning, reaching the $1.22 mark. The uptick reflects investor confidence in the UK’s economic recovery. Earlier this week it had sunk as low as $1.21 as investors parse an environment where interest rates could stay higher for longer.
Any upside for the pound will be well received by traders as it has been on the decline since mid-July.
JD Sports (JD.L), the FTSE’s top gainer this morning with a 5.6% gain, is reportedly benefiting from Nike’s fantastic earnings, which the sportswear company announced after Thursday’s closing bell.
While Nike’s Q1 revenue increased by 2% to $12.9 billion from $12.7 billion in the year prior, the company’s net income fell by 1% to $1.5 billion.
After posting a strong set of financial results, JD Sports has enjoyed considerable favour in recent weeks. For the 26 weeks ending July 29, 2023, it reported earnings before tax of £375.2 million, up 25.8% from £298.3 million during the same period in 2012. It stated at the time that it was on schedule to open more than 200 new outlets worldwide by January 2024.
Asian equities had a mixed day on Friday, with the Hang Seng (HSI) index standing out with a 2.8% gain by the closing bell. In contrast, the Nikkei (N225) and SSE composite (000001.SS) in Japan both experienced a 0.1% decline.
Traders are analysing data from Japan, notably the 2.8% increase in September’s Tokyo inflation rate from a year earlier. Core inflation, which is typically regarded as a better indicator since it excludes volatile portions of the economy like the cost of fresh food, was 2.5%. This was less than the 2.6% increase surveyed by Reuters analysts.
The S&P 500 (GSPC), the Dow (DJI), and the Nasdaq (IXIC) all completed Thursday’s trading in the green, with the S&P 500 (GSPC) advancing by 0.6%, 0.4%, and 0.8%, respectively.
Later today, the reading for the personal consumption expenditures price index is expected. The Federal Reserve’s chosen inflation indicator is the PCE reading.