FTSE 100 bolstered by homebuilders as banks ease back

A strong US CPI reading has hit the Dow, pushing it into the red, but the FTSE 100 has held some of its gains thanks to a bounce in homebuilders.

• US CPI remains stubbornly persistent.

• JPMorgan retains its optimism on the US economy.

• Barratt Developments soars and offsets weakening bank stocks.

Yet again inflation concerns have prompted a hit to risk appetite. It was always going to be tough for central banks to stick to the ‘transitory’ line given repeated high inflation prints, and today’s latest figure for the US amplifies these concerns. Even the IMF is beginning to get jittery it seems, warning about risks to the upside. The problem of course is that these price rises, and we should expect more, are coming just as growth slows from the rebound-phase of the past year. Thus Jerome Powell and others confront a tough environment, and will have to tread carefully. Earnings season began on a mixed note, but from the tone of the results JPMorgan still sees reasons to be confident about the US recovery. If investors can look past the mentions of supply chain disruptions that will invariably populate the coming earnings season and focus on the fundamentals then a more positive view may continue to emerge.

Barratt Developments continues to lead housebuilders higher in afternoon trading on the FTSE 100, after a solid update that confirms a continued recovery in activity despite the end of Help to Buy and the stamp duty holiday. Prices are going up too, offsetting concerns about the inevitable supply chain disruptions. These gains in housebuilders today have helped keep the index in positive territory, offsetting weakness in bank shares in the wake of JPMorgan’s results.