Wall Street pushed higher on Wednesday, with the FTSE 100 (^FTSE) and European stocks closing higher as US inflation slowed to 3.4%.
The US consumer price index rose by 3.4% in the year to April, down from 3.5% in March, in line with forecasts.
In April alone, prices rose by 0.3%, a slowdown on March when they increased by 0.4%. Core US inflation also eased last month.
Elsewhere, the eurozone economy grew 0.3% in the first three months of the year, new data has shown.
The single currency’s gross domestic product (GDP) expanded during the period, although half as fast as the UK, exiting a recession at the end of last year.
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London’s benchmark index finished 0.2% higher after hitting a new intraday high earlier in the session
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Germany’s DAX (^GDAXI) climbed 0.8% and the CAC (^FCHI) in Paris finished 0.2% higher
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The pan-European STOXX 600 (^STOXX) was up 0.6% — a record high
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Wall Street pushed higher on the back of the inflation data and after news that US retail sales were flat in April
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The pound (GBPUSD=X) was against up 0.5% the dollar at 1.2656
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Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “The feel-good factor is still washing through London markets as investors spy interest rate cuts on the horizon, despite signs prices are proving sticky.
“Although wage growth is staying stubborn in the UK and producer prices came in hotter than expected in the US, investors are staying pretty sanguine. Markets still expecting painful borrowing costs to ease this year, even though cuts are now expected to come later than hoped.
“The key CPI reading in the United States later will be crucial as far as sentiment is concerned, as it looks set to indicate that patience will be needed, before the Fed will feel comfortable about lowering rates. The risk is that if interest rates linger for a lot longer, it will push the economy into a much tougher position, with weaker growth prospects, which could erase some of the recent gains on markets.”
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US inflation slows to 3.4%
U.S. Federal Reserve Chair Jerome Powell attends a press conference, following a meeting of the Federal Open Markets Committee, in Washington on May 1, 2024. ( The Yomiuri Shimbun via AP Images ) (Hiroyuki Tanaka, Associated Press) US inflation slowed to 3.4%. The consumer price index rose by 3.4% in the year to April, down from 3.5% in March, in line with forecasts.
In April alone, prices rose by 0.3%, a slowdown on March when they increased by 0.4%. Core US inflation also eased last month.
The Bureau of Labour Statistics said:
“The index for shelter rose in April, as did the index for gasoline. Combined, these two indexes contributed over seventy percent of the monthly increase in the index for all items.
“The energy index rose 1.1% over the month. The food index was unchanged in April. The food at home index declined 0.2 , while the food away from home index rose 0.3% over the month.
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How to claim expenses at work without breaking the rules
Last week marked the 15-year anniversary of the breaking of the MP’s expenses scandal, which alerted us all to the fact that our taxes had somehow been spent on moat clearing and a duck house.
We were gripped for weeks by expenses that had been claimed for everything from a toilet seat and a trouser press to a packet of Hobnobs. Since then, the system has been reformed and the issue of expenses dropped out of sight.
It’s something millions of people barely think about, except when they’re arm-wrestling with the finance department at work over the cost of a sandwich — or staring at an enormous pile of receipts as they brace themselves for a tax return.
However, it’s worth spending some time getting your head around the rules, because a better knowledge of how they work can save you money.
Read the full article here
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BoE warns banks to prepare for shocks
Bank of England exterior façade with cloudy grey sky. London. UK (Bailey-Cooper Photography) The Bank of England has issued a warning to UK banks and building societies after a review found firms were ill-prepared for a severe shock that could put their finances at risk.
A letter sent by the Bank’s Prudential Regulation Authority said firms had failed to create severe enough stress tests and as a result, did not have sufficient recovery plans.
It said:
“Our review found that a number of firms did not use scenarios of sufficient severity, which will limit the effectiveness and value of the testing.”
“…although many firms understand the basics of recovery planning, there are significant areas for improvement, most notably related to the development of recovery scenarios and the calculation of recovery capacity.”
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Tui hails good demand for upcoming summer season
TUI Boeing 737 (Bill Lewis) Tui revealed better than expected results, with good demand for the upcoming summer season despite rising prices for trips abroad.
The group, which is switching its listing from London to Frankfurt next month, reported pre-tax losses of €403.1m (£346.6m) for the six months to the end of March, against €648.8m a year earlier. Its group loss stood at €330.5m, against losses of €558m.
“Travelling is very popular with people. We see trends that will further strengthen this in the future,” CEO Sebastian Ebel said in a statement.
But the company said its average prices were around 4% higher for the summer season than a year ago.
Meanwhile, the group’s summer programme is 60% sold, in line with the previous year’s level, with nine million bookings for the upcoming peak season, up 5% year-on-year.
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Gold gains ahead of US inflation data
Gold prices (GC=F) edged higher on Wednesday, supported by lower Treasury yields and a softer US dollar, ahead of inflation data that may shed light on the Federal Reserve’s path for interest rates.
The precious metal added to Tuesday’s gain of almost 1%, gaining around 0.6% to $2,374 an ounce. The Bloomberg Dollar Spot Index edged lower for a second day, which can also make bullion more attractive.
Silver and palladium gained, while platinum climbed as much as 2.2% to the highest in about a year.
Gold prices are up 15% this year, with gains underpinned by central bank buying, heightened geopolitical risks and consumer demand in China. Bullion has gained despite the anticipated timing of the Fed’s pivot being pushed back.
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