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Wall Street mixed as inflation falls and FTSE 100 hits new four and a half year high

FTSE  Federal Reserve Board Chairman Jerome Powell leaves a news conference after Powell announced the Fed raised interest rates by three-quarters of a percentage point as part of their continuing efforts to combat inflation, following the Federal Open Market Committee meeting on interest rate policy in Washington, U.S., November 2, 2022. REUTERS/Elizabeth Frantz
Today’s US inflation were welcomed by FTSE and Wall Street investors as they mean the Fed might slow the pace of interest rate hikes. Photo: Elizabeth Frantz/Reuters

The FTSE 100 and European stocks were higher this Thursday Stocks as investors welcomed the drop in US inflation last month.

The FTSE 100 (^FTSE) rose 1% to close at 7,806, while the CAC 40 (^FCHI) in Paris climbed 0.82% to 6,981 points. In Germany, the DAX (^GDAXI) advanced 0.74% to 15,058.

The FTSE 100 has pushed above 7,800 for the first time since May 2018, as it closed on a record high.

Across the pond, Wall Street reacted mixed to the news US inflation slowed down in December.

The Dow Jones (^DJI) gained 0.43% to 34,120 while the broad-based S&P 500 (^GSPC) was muted at 3,972 amid hopes the US Federal Reserve will be able to slow down its pace of interest rate rises. The tech-heavy NASDAQ (^IXIC) lost 0.14% to 10,916.

US consumer prices fell by 0.1% month-on-month in December, which should bring some relief to households and businesses.

This pulled the annual inflation rate down to 6.5%, down from November’s 7.1%, the lowest reading in over a year.

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Naeem Aslam, chief market analyst at Avatrade, said: "Inflation is moving in the right direction, which should keep some pressure off the Fed. This is really important to keep in mind. Now what matters the most is the noise coming from the Fed members."

Gasoline was “by far the largest contributor” to the monthly all items decrease, more than offsetting increases in the cost of shelter, or housing.

Food prices rose by 0.3% in the month, with the ‘food at home’ index rising 0.2%.

The energy index decreased by 4.5% over the month as the gasoline index declined; other major energy component indexes increased over the month.

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Back in London, housebuilder Persimmon (PSN.L) was the biggest riser its latest update. Its shares rose 9.06% rise after its trading update.

Centrica (CNA.L), up 4.23 %, was the one of the biggest climbers on the FTSE 100 in early trading after it raised its predictions for earnings per share this year, as higher energy prices increased profits from gas production and nuclear generation.

Shares in Shell (SHEL.L), Rio Tinto (RIO.L), Vodafone (VOD.L) and BP (BP.L) were also up, pushing the FTSE 100 higher.

Read more: FTSE 100: Tesco posts bumper Christmas sales despite cost of living crisis

Meanwhile, Brent crude (BZ=F) bounced back and was trading at around $84/barrel, amid renewed optimism over China's demand outlook.

Read more: FTSE 100: JD Sports expects £1bn profit on robust recovery and rising sales

In Asia, Tokyo’s Nikkei 225 (^N225) finished flat at 26,449 points, while the Hang Seng (^HSI) in Hong Kong rose 0.36% to 21,514. The Shanghai Composite (000001.SS) also closed muted, at 3,163 points.

Watch: Stocks mixed on inflation data, crude oil rises