Stocks are in a bit of a chop mode now having run up pretty well this year. The FTSE 100 is higher this morning by about 0.5 per cent led by basic resources and oil after a decline of 1 per cent yesterday, which shaved its YTD rally to about 4 per cent.
Shares in Frankfurt also rose having declined more than 1.7 per cent on Thursday, still up more than 7 per cent YTD. Paris was off 1.86 per cent, but still +7 per cent or so for the year. Wall Street closed lower for a third session in a row and are on track to notch weekly losses amid softening economic data. Nordstrom (US: JWN) fell 5 per cent after-hours after it reported weak holiday sales. Gold made a fresh high at $1,937 even as the dollar held its ground with DXY just a shade below 102. Oil is bit firmer after bouncing off the 50-day line.
More goodish news on the inflation front – German producer price inflation is falling, declining 0.4 on the month. So, it’s now only running at +21.6 per cent on the year. PPI ran at +32.9 per cent on an annual average in 2022 compared to 2021. It kind of highlights the whole peak and plateau thesis. The rate of inflation may have peaked but it’s still running at a hell of a clip and will continue to do so.
Japan’s inflation rate rose to 4 per cent – as expected after the Tokyo number hit this 40-year high. It only underlines just how far away the Bank of Japan is right now in terms of monetary policy and how much ground it will have to make up in the coming months.
UK retail sales fell 1 per cent as higher inflation weighed on demand, but the broadly positive risk tone has seen some of the big retail stocks a bit higher. Meanwhile the GfK consumer confidence index fell back to -45 after a brief pre-Christmas improvement.
Neil Wilson is the Chief Market Analyst at Finalto
