LONDON (AFP) – Stock markets mostly fell yesterday before crunch United States (US) inflation data, with investors concerned that a spike in oil will drive consumer prices higher and force the Federal Reserve (Fed) to lift interest rates again.
All eyes were on the latest reading on US inflation ahead of an interest-rate decision today from the European Central Bank (ECB) and the Fed next week.
“Oil prices have risen by more than 25 per cent over the past few months, which suggests a new inflationary pressure and something that will muddy the outlook for the Fed at its next rate meeting,” noted investment director Russ Mould at AJ Bell.
The dollar traded mixed before the inflation reading.
The US central bank has insisted that its decision-making on monetary policy will be data-driven as it assesses a range of figures, which have for much of 2023 suggested that more than a year of tightening is having the desired effect.
That had fanned optimism that July’s hike was the last and officials would allow its measures to work through the economy and bring inflation to heel.
But a recent run of strong data, particularly on the jobs market and the services sector, has revived talk that more were on the way, with a surge in oil prices to 10-month highs adding to those concerns.
The pick-up has been fuelled by Saudi Arabia and Russia’s decision to slash output until the end of the year, while floods in Libya have hammered its ability to pump.
Oil prices rose further yesterday as the International Energy Agency (IEA) warned that Moscow and Riyadh’s decision would cause a “significant supply shortfall”.
Away from oil, German footwear brand Birkenstock has filed for an initial public offering in the US, planning to list its shares on the New York Stock Exchange.
The proposed terms of its share sale have not been revealed, but news reports previously said that the IPO could value the sandal maker at more than USD8 billion.
The brand, founded in 1774 to make orthopaedic shoes, received a Hollywood boost recently when actress Margot Robbie donned a pair of pink Birkenstocks in the lead role of the hit movie Barbie.