Global equity indices observed a marginal upsurge on Tuesday in light of the unexpectedly potent data regarding US producer prices and remarks about inflation by Federal Reserve chairman Jerome Powell. Addressing a banking conference in Amsterdam, Powell projected that US inflation would keep dwindling until 2024. However, he admitted that his faith in this forecast had lessened considering the pace at which prices swelled in the first quarter.
Tuesday’s data revealed a surge in US producer prices for April, surpassing speculations due to robust gains in service and goods costs. These figures point at persistent inflation during the initial phase of Q2. However, Wednesday’s US consumer price report will be the most crucial data this week, with investors keenly mulling over the inflation data to determine the Fed’s timeline for interest rate reductions.
In Dublin, the chief financial actors – AIB, Bank of Ireland and PTSB – recorded an increase of 0.7%, 1.65% and 1% respectively, on an otherwise subdued trading day. Earlier in the month, the government pared down its stake in AIB following the bank’s repurchase of its shares worth nearly €1 billion.
Ryanair saw its stocks drop by 0.6% closing at €18.78, whereas Kingspan, the insulation manufacturer, saw their stocks increase by 0.7% to reach €89.20. Cairn and Glenveagh, the homebuilders, witnessed their stocks rise by 0.7% and 0.6% respectively, in wake of the government’s upcoming announcement of augmented housing goals.
London’s stock experienced a rise on Tuesday, spurred by advances in the personal goods industry. This, along with a tight labour market and potent wage growth, had investors second-guessing about interest rate cuts. The FTSE 100 index climbed 0.2% after breaking a six-session win streak on Monday. Conversely, the mid-range FTSE 250 index capped off with a 0.3% rise. The personal goods sector led with a 2% upturn, followed by a 1.1% increase in the medical equipment and services sector. Furthermore, recent data indicates a greater-than-expected wage growth in the UK, although other statistics hint towards a drop in its inflationary momentum, resulting in a division in opinions regarding interest rate cut predictions for June among currency market participants.
In business highlights, telecommunications provider Vodafone increased by 4.7% after managing to meet the predicted market estimates for the year ending in March. Meanwhile, Flutter, the parent company of Paddy Power, decreased by 1.9% after the biggest online gambling firm released its Q1 results.
Anglo American took a 3.2% hit, making it the poorest performer on the index, following in the wake of Reuters’ report on its potential flotation of diamond enterprise De Beers, encouraged by the head of BHP Group to examine the advantages of acquisitions.
Over in Europe, most sectors of the pan-European Stoxx 600 index experienced growth, leading to an overall increase of 0.2%. Automobile shares were the highest performers, with an increase of over 1.3% for that day. Shares in Delivery Hero surged 26% as a result of the announcement of its deal with Uber, which will acquire its Foodpanda subsidiary in Taiwan in a broader $1.25 billion agreement. This news also propelled the shares of competitors Just Eat and Hellofresh. Trading in Germany saw a slight drop in the Dax index, which closed down by 0.09%, while France’s Cac 40 ended the day up 0.2%.
In New York, slight gains were witnessed in the primary Wall Street indices as investor interpretation of uneven producer prices data preceded significant consumer prices data, expected to deliver further understanding about potential interest rates in the globe’s leading economy. US producer prices went beyond predictions in April, fuelled by considerable increases in service and goods costs, which led investors to lessen their expectations of a primary rate cut in September.
Jerome Powell, the chairman of the Federal Reserve, characterised the PPI report as more “varied” than “inflated”, given the downward revision of previous data. Persistent inflation and steady labour market performance pushed back initial expectations of a Federal Reserve interest rate cut from March to September. Lastly, Alibaba’s US-listed shares dropped by 6.7% after an 86% fall in Q4 profit.