Stocks shrug off rise in US inflation

Global stock indices are rising once more today with the FTSE 100 adding more than 50 points after the markets shrugged off a higher than expected US inflation print yesterday afternoon. The initial reaction saw a swift swoon lower but the declines were steadily recaptured and equities now look on a firmer footing going forward. Yesterday’s reaction to the data represents a major hurdle cleared for the stock markets and whilst it would be premature to call an end to the recent weakness, the outlook is now more favourable than it has been for the past week or so. The US dollar also reversed its first move following the data release with a wave of selling hit the Buck in the late afternoon and pushed the GBP/USD rate back above the 1.40 handle.

Miners amongst the biggest gainers

The resignation of Jacob Zuma has boosted dual-listed stocks this morning with both Anglo American and Old Mutual making strong gains. Old Mutual is in fact the biggest riser of all UK blue-chips and higher by almost 4% after Zuma finally bowed to pressure and stood down from his position as President. Whilst the majority of stocks on the benchmark are moving higher there are also some notable decliners with Standard Life Aberdeen dropping nearly 5% after the asset manager announced that it would lose its biggest clients. Lloyds Banking Group have decided to terminate a contract for the recently merged group to manage £109B of assets for the bank’s Scottish Widows insurance business. The arrangement represented almost 17% of Standard Life’s £646B total assets under management, but due to the lower margins involved this only accounted for approximately 5% of last year’s revenues.

Oil on course for biggest two-day rally in almost 3 months

The price of oil has made a fairly strong move higher in recent trade with a smaller than expected rise in US inventories sparking the move. With Brent crude futures currently higher by more than 3% in the past couple of days the market is on track for tis largest 2-day gain since November. However these gains should be put in context, and the broader picture remains less favourable for the market with last week seeing the largest drop in two years with declines of around 8%. US production continues to rise and with the latest rig count figures showing a sharp increase there is a growing feeling that more supply will hit the market in the coming months, dampening the impact of the OPEC-led supply cuts, and acting as a downward force on price going forward.