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Summary
- FTSE 100 trades in the negative zone after higher-than-expected UK inflation of 2.5%.
- Investors took safe bets in banking and commodities amid fear of inflationary pressure.
FTSE 100 is trading in red, down by 41 points at 7082, reacting negatively to 2.5% in June inflation number. The figure was well above the 2% ceiling set by the Bank of England and the highest since August 2018. Index top five gainers are from banking and mining sectors like NatWest Plc up by 1.39%, Anglo American Plc up by 1.24% and Glencore Plc up by 1.13% as high inflation could pressure the central bank to increases the interest rate to curb inflation, which benefits banks with higher margins and increase in commodities price likely to benefit metal and mining stocks.
Mid-cap focused FTSE 250 was also down by 143 points, trading at 22783.
Major European markets index also trades in red, with the German blue-chip DAX index down by 0.15% at 15766, and the French index CAC40 at 6544, down by 0.21%. The industrial production output fell 1% month on month in the Eurozone, led by the drop in the output of non-durable consumer goods.
Currency Markets:
The pound was up by 0.39% at 1.3864 against the US dollar after higher the expected inflation number while the GBP/EUR currency pair traded at 0.8512, down by 0.13%.
Commodities:
WTI Crude oil August Future traded at USD 74.89, down by 0.53%, and Brent crude oil contract traded at USD 76.13, down by 0.47% after China reported a 3% decline in crude oil import during the first half of 2021. According to market experts, the Import contraction is due to a rise in global crude oil prices, refinery maintenance and lockdown. China crude oil import has dropped for the first time since 2013. Despite today’s fall in prices, crude oil prices quote near weekly high after the API inventory releveled eight straight weeks of drop in crude oil stock because of high demand and lower supply.
Gold August contract traded at USD 1817 per ounce, up by 0.44%. Gold, which is often considered an excellent hedge against inflation, rose after the US reported a 0.9% rise in June month inflation.
Asian Markets:
Major Asia Pacific indices remained mixed on closing with Nikkei 225 of Japan closed in red, down by 0.38% at 28608. Hong Kong’s Hang Seng index was down by 0.51% at 27744. India’s Nifty 50 closed in green at 15853, up by 0.26%. Australia’s ASX200 closed at 7354, up by 0.31%, while china’s Shanghai Composite closed at 3528, down by 1.
