After the US Consumer Price Index (CPI) was released on Wednesday, which rose by 4.2 per cent as compared to last year, the US stock market witnessed a slide but the UK stocks remained fairly unaffected by the inflation data.
The US Consumer Price Index (CPI) rose by 4.2 per cent this April, which is the sharpest increase since September 2008. The month-to-month gain was 0.8 per cent, against the expected 0.2 per cent.
Ahead of the release of the US CPI, the world’s leading stock markets witnessed a steep fall on Tuesday which was prompted by fears that central banks will abandon their zero-interest-rate policies due to mounting inflation.
The FTSE index dropped below the 7,000-mark on Tuesday after hitting a post-pandemic high of 7,164 on Monday.
However, on Wednesday, the Financial Times Stock Exchange (FTSE) 100 Index closed at 7,004.63, which is a slight increase of 0.82 per cent, after seeing its biggest one-day fall since February on Tuesday, when it closed at 6947.99, a drop of 175.69 points or 2.47 per cent.
The FTSE 100 Index is a share index of 100 companies listed on the London Stock Exchange and has the highest market capitalization.
Furthermore, stock markets across Europe slid amid worries that US inflation was set to rise.
On May 11, Germany’s Dax went down by 1.8 per cent, France’s CAC was down 1.9 per cent, Italy’s FTSE MIB dropped by 1.6 per cent and Spain’s IBEX plummeted by 1.7 per cent. The Europe-wide Stoxx 600 saw its worst day of 2021, falling by nearly 2 per cent.
However, European stocks steadied on Wednesday with the UK’s FTSE 100 closing in the green and the pan-European STOXX 600 index rising by 0.2 per cent.
Meanwhile, US stocks plummeted by nearly 1 per cent as the CPI data was released.
On Wall Street, the Dow Jones dropped by over 371 points or 1.08 per cent to 33,898, the S&P 500 lost over 58 points at 4,094 and the Nasdaq exchange closed at 13,094 with a drop of 295 points.
Even though there is a jump in consumer prices in the US, it also partly reflects a recovery as the COVID-19 pandemic eases.
The Consumer Price Index includes what consumers pay for goods and services, including clothes, groceries, restaurant meals, recreational activities and vehicles.