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FTSE flat with US inflation in focus

by LLB Reporter
13th Dec 22 9:38 am

Markets are in a holding pattern ahead of the US inflation reading – a data point which will be keenly watched ahead of the latest decision from the Federal Reserve this week.

Anything below the 7.3% pencilled in by analysts could give stocks a boost as it solidifies the case for the Fed to start easing up on rate hikes. Anything above this number could see investors take fright as they assume it means they will have to take more of the central bank’s painful medicine to curb rising prices.

A 50-basis point increase is seemingly locked in, and this could influence Jerome Powell and his colleagues’ thinking in the early months of 2023.

AJ Bell investment director Russ Mould said: “A UK jobs market which had proved fairly resilient so far despite the gloomy economic backdrop shows increasing signs of weakening as the unemployment rate creeps up and the level of vacancies drops.

“There are signs that the exit from the workforce of large numbers of working age people in the wake of the pandemic is reversing as cost-of-living pressures act as a pull factor for people to return to employment.

“Wage growth nudged up but remained a long way short of the rate of inflation and this is probably not going to dissuade the Bank of England from slowing the pace of rate increases when it meets on Thursday.”

“Good news for insolvency practitioner Begbies Traynor tends to be bad news for almost everyone else.

“The company is seeing momentum build across its business – most notably in the insolvency part as UK businesses struggle with weak consumer sentiment, surging costs and rising interest rates.

“Soberingly, Begbies expects to continue to do well moving forward which suggests it can see that there are a large number of firms which are close to the brink.”

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