US stocks climb to record highs as inflation clip higher than expected

US stocks climbed to record highs today as investors were boosted by data showing inflation growth in America may have peaked.

The Dow Jones hit a record high today, surging 0.57 per cent to 35,465 points.

The blue-chip S&P 500 also trailed higher, up 0.19 per cent to 4,444 points.

However, the tech-heavy Nasdaq dropped 0.28 per cent to 14,747 points, possibly driven by expectations that the Federal Reserve will tighten monetary policy soon intensifying.

Data from the US Labor Department released today showed US inflation hit 5.4 per cent annually in July, the same rate recorded in June.

Economists had expected inflation to cool to 5.3 per cent.

Although price rises remain at the highest level since 2008, the flat-lining rate indicates inflation growth may have run its course.

The figures “lend support to the transitory narrative and saw US bond yields which had been edging up heading into the numbers, reverse course and slip back,” said Michael Hewson, chief market analyst at CMC Markets UK.

Yields on 10-year US Treasuries were broadly flat on the news at 1.32 per cent.

FTSE 100 surges to 18-month high

London’s FTSE 100 rose to an 18-month high today driven higher by financials and export-focused stocks.

The capital’s premier index climbed 0.83 per cent to close the day at 7,220 points.

The gains sharply contrast with investors pulling back from stocks for much of last week on concerns that the rapid spread of Covid cases globally could constrict the economic recovery from the pandemic.

The FTSE 100 closed up 0.4 per cent yesterday, marking a one month high. 

Meanwhile, the mid-cap FTSE 250 also closed at a record high today, adding 0.78 per cent to reach 23,756 points. AIM shares lifted 0.21 per cent to hit 1,268 points.

The pound gained ground on the greenback, strengthening 0.31 per cent to buy $1.38.

Winners and losers

Manufacturer Spirax Sarco topped the table of the biggest risers on the FTSE, shooting up 4.23 per cent to 15,765p.

Insurer Admiral placed second after it posted a strong set of results showing pre-tax profits jumped 76 per cent. Its shares were up 3.91 per cent to 3,584p.

Retailer JD came third, gaining 3.51 per cent to reach 972.80p.

Takeaway delivery service provider Just Eat Takeaway.com dragged the FTSE down, plunging 4.01 per cent to close at 6,271p, despite rival Deliveroo saying it had seen no impact on order volumes from the reopening of British restaurants.

Insurer Phoenix Group came second on the worst performer rankings, sliding 2.2 per cent to finish at 684.60p. Miner Rio Tinto dropped 1.02 per cent to 6,101p.

Around the world

Asian stocks were mixed in overnight trading, with China’s CSI 300 the only benchmark in the region to register losses.

Japan’s Nikkei added 0.65 per cent to hit 28,070 points and Hong Kong’s Hang Seng strengthened 0.2 per cent to 26,660 points.

London’s strong performance was extended into Europe – the Stoxx 600 was up 0.41 per cent to close at 474.24 points today.