Pre-Fed jitters keep US stocks below record highs at open
US stocks opened just below record highs today as investors stayed on the fence ahead of potential hints from the Federal Reserve on when it would taper its monetary stimulus.
The Dow Jones Industrial Average was down 0.1 per cent, while the S&P 500 opened flat, remaining near an all-time time.
Meanwhile, the Nasdaq Composite was up 0.1 per cent as tech stocks continued to trade slightly higher.
The Fed has tried to calm concerns that rising inflation would prompt it to tighten its ultra loose monetary policy.
However, data yesterday showed a jump in producer prices, once again raising expectations that the central bank could consider closing the taps at its meeting this week.
Inflation concerns have dominated the markets in recent weeks even as the gradual reopening of the US economy has pushed indexes towards all-time highs.
“All eyes are really on consideration of tapering,” said Art Hogan, chief market strategist at National Securities in New York.
“My guess is it’s likely not today’s business and more in line with August’s Kansas City, Jackson Hole summit where they might introduce the concept of timing around tapering but you never know.”
London markets
London’s FTSE 100 edged higher today after data showed inflation jumped past the Bank of England’s target in May.
The blue-chip index rose 0.2 per cent this afternoon to its highest since February 2020, lifted by gains in heavyweight financials and energy stocks.
Life insurers and banks provided the biggest boosts, while oil majors BP and Royal Dutch Shell advanced.
Meanwhile, the domestically focused mid-cap FTSE 250 was down by 0.2 per cent during afternoon trading.
British inflation unexpectedly jumped above the BoE’s two per cent target in May when it hit 2.1 per cent. The rise was driven by a surge in clothing, fuel, games, and takeaway food prices.
“Today’s inflation print confirms that as the UK economy proceeds in its reopening, inflationary pressures continue to build,” said Ambrose Crofton, global market strategist at JP Morgan Asset Management.
“With UK consumers cooped up over a miserable winter, many are now keen to enjoy themselves and spend on the things they’ve missed out on.”
Market movers
The afternoon’s biggest winner was outsourcer Bunzl, who rose 2.7 per cent, followed by Johnson Matthey, up by 2.6 per cent.
Betting firm Flutter Entertainment and Sainsburys also rose 1.9 per cent and 1.8 per cent respectively.
Miner Antofagasta was the morning’s biggest faller, dropping by four per cent, followed by Glencore’s two per cent hit.
Meanwhile, Evraz and Land Securities Group both dipped by two per cent and 1.8 per cent respectively.
Around the world
Asian shares retreated slightly today after modest Chinese retail sales data and industrial production offered reason for caution.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.3 per cent, while Chinese blue chips dipped 1.1 per cent.
Japan’s Nikkei also eased 0.5 per cent, but South Korean stocks surged 0.6 per cent to a record high.
Trading could be choppy around the conclusion of the Federal Reserve’s two-day meeting later in the session.
“We think Chair Powell will indicate officials discussed talking about tapering, but tapering itself is still someway off given the Fed remains well short on making substantial progress on employment with payrolls still 7.3m below pre-pandemic levels,” said NAB economics director Tapas Strickland.