The FTSE 100 was lower ahead of a crunch end to the five-day trading session which features the end of the Bank of England’s gilt-buying programme tomorrow and, later today, US inflation figures.
It feels like the markets are feeding hungrily on any scraps of good news and even the merest hint inflation is cooling would likely be taken as a sign that, despite the US Federal Reserve’s earnest protestations, the tide is about to turn on interest rates.
Investors probably shouldn’t hold their breath given the trend in core inflation suggests higher prices are proving as sticky as toffee.
AJ Bell investment director, Russ Mould, said: “The situation in the US is not as unhappy as in the UK where pension funds are scrambling to prepare for the withdrawal of liquidity support from the Bank of England on Friday – a race which is likely to have few, if any, winners.
“Pressure for further U-turns on the mini-Budget is only likely to build as gilt yields rise and sterling falls, and in the meantime the Bank’s insistence that the time-limited measures will be just that could face a severe test.”
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