The US open has highlighted the growing concerns evident in anticipation of tomorrows CPI reading, while rising energy costs in the UK spell trouble for consumer spending power.
US inflation looms as potential risk for markets
“US markets have dented confidence this afternoon, with the FTSE 100 providing the one area of strength in an otherwise tumultuous day for equities. The fears around another potential inflation-fuelled selloff in high multiple stocks has dented the likes of the Nasdaq in particular, with the recent earnings-based optimism starting to wane ahead of tomorrows crucial US inflation release. For traders, there is an innate risk associated with the widespread expectation that inflation will remain at 9.1%, for any upside surprise could easily spark fears of another sharp increase in rates thanks to Friday’s bumper jobs report. With earnings season drawing to an end (89% reported), there is a distinct possibility that we will see the focus shift back to the worrisome economic and monetary policy outlook that lies ahead. ”
UK energy prices spell trouble for consumers
“The latest energy price forecasts from Cornwall Insight prove worrying for UK households, with average costs rising to around £368 per month come April. Many had hoped the well publicised spike in prices from October would be the peak of the crisis, but wholesale costs signal the likely continuation of the crisis as energy providers lock-in long-term contracts at elevated levels. The surge in energy prices does bring significant concerns for UK businesses, with demand likely to suffer amid a collapse in disposable income. ”
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