The latest from London: UK markets remain resilient despite inflation

Despite speeches last week from central banks that inflation would only be transitory, investors are having a hard time digesting yesterday’s US inflation figures, which surpassed expectations. In fact, they marked the biggest annual rise in U.S. inflation since 1990.

Wall Street ended in the red as a result but this morning, FTSE 100 follows is still inching up 0.1%, following yesterday’s good performance, due to strong earnings reports, including Marks & Spencer, which reported half-year revenue growth that was 5% above 2019 levels.  ITV climbed 15.1% after announcing it expects record advertising revenue in 2021.

However, it is becoming harder for investors to believe central banks when they say that inflation is transitory, and even the Fed might be forced to change its tune after yesterday’s data. While earnings kept markets afloat, the rest of the year could be more choppy.

Especially since fresh data shows the UK’s economy only grew by 0.6% in September, and is still below pre-pandemic levels.

 

Things to read today:

Elon Musk Sells Around $5 bln in Tesla Stock (WSJ)

Stocks Close Lower, Bond Yields Rise as Inflation Reaches 31 Year High (WSJ)

It’s Official – The Inflation Numbers are a Hot Sticky Mess (Bloomberg)