It feels like fears over inflation have returned with a vengeance this week as central bankers increasingly struggle to mask their own nervousness about rising prices, says Danni Hewson, financial analyst at AJ Bell.
“Still UK stocks have put on their happy face this morning. Travel and hotel stocks trading firmly higher as traditional holiday destinationsIbiza, Majorca, Menorca and Formentera are added to the UK’s amber list and demand for staycations continues to surge.
“Investors may be hoping for a number which is neither too hot nor too cold when the US reports retail sales figures later. If the reading is a lot higher than expected then there will be concern that the world’s largest economy is overheating but if the data is much weaker then there will be fears the recovery from the pandemic is being knocked off course amid mounting infection rates linked to the Delta variant.
“US reporting season is already in full swing and next week should kick off in earnest in the UK too – helping to give the markets some sense of direction as it continues to navigate the twin threats of inflation and Covid-19.”