NEW YORK – Wall Street shares edged higher on Wednesday after another report showed rising U.S. inflation, as the dollar continued to sell against other major currencies.
The Labor Department said its consumer price index jumped seven percent last year, its fastest pace in four decades. However, the month-over-month increase slowed to 0.5% from November, indicating that the price spike may stabilize.
Markets viewed the data as broadly in line with expectations and unlikely to elicit a more aggressive response from policymakers than that described by Federal Reserve Chairman Jerome Powell in testimony in Congress on Tuesday. Stocks recovered after his intervention.
The data “is widely expected,” said Jack Ablin, chief investment officer at Cresset Capital, who noted that increasingly higher inflation readings were becoming unlikely.
“We think inflation is actually peaking, probably around now,” Ablin said. “And it will probably go down as we move into the rest of the year.”
US stocks had a choppy session after strong gains in major European and Asian exchanges. But all three major indices rose again, with the S&P 500 gaining 0.3%.
“It seems that the market had prepared for even higher inflation, which obviously did not materialize. The reaction can therefore be described as a relief, ”said Fawad Razaqzada, analyst at ThinkMarkets.
Fears of an abrupt end to the Fed’s ultra-relaxed monetary policies that helped fuel a two-year market rally have resulted in a volatile trading start this year.
But on Wednesday, the mood appeared resolutely optimistic.
Data from China showed inflation there had eased, leaving Beijing to take action to revive the economy from stuttering, including interest rate cuts, analysts said. .
Michael Hewson of CMC Markets UK said some might interpret the Chinese figures as “a leading indicator that global inflationary pressures may start to ease”.
It “seems a bit premature” given the US data, he added.
In other markets, oil prices rose, as the dollar continued to pull back after recovering in the last period of 2021 in anticipation of monetary tightening from the Fed.
The fall in the dollar is a “buy the rumor, sell the fact,” a Joe Perry note on Forex.com said after the US currency “has been in a long-term ascending channel since May 2021.”
Key figures around 2040 GMT
New York – DOW: UP 0.1% to 36,290.32 (close)
New York – S&P 500: UP 0.3% to 4,726.35 (close)
New York – Nasdaq: UP 0.2% to 15,188.39 (close)
London – FTSE 100: Up 0.8% to 7,551.72 (close)
Frankfurt – DAX: Up 0.4% to 16,010.32 (close)
Paris – CAC 40: + 0.8% at 7,237.19 (closing)
EURO STOXX 50: UP 0.8% to 4,316.39 (closing)
Tokyo – Nikkei 225: + 1.9% to 28,765.66 (closing)
Hong Kong – Hang Seng Index: EN up 2.8% at 24,402.17 (close)
Shanghai – Composite: UP 0.8% to 3,597.43 (close)
Euro / dollar: up to 1.1451 from $ 1.1367 on Tuesday night
Pound / dollar: UP to 1.3713 from $ 1.3635
Euro / pound: up to 83.48 pence against 83.36 pence
Dollar / yen: DROP to 114.53 yen against 115.30 yen
North Sea Brent: Up 1.1% to $ 84.67 per barrel
West Texas Intermediate: EN up 1.7% to $ 82.64 per barrel
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