FTSE Falls Mid-Week
UK stock prices continue to push lower as move through the middle of the week. The latest UK economic data released this morning showed that inflation cooled slightly last month, though came in above forecasts and remains well above the BOE’s 2% target. Headline annualised CPI printed 3.6% in October, down from 3.8% prior but above the 3.5% the market was looking for. Core CPI, meanwhile, fell to 3.4% from 3.5% prior, in line with expectations.
Food Inflation Bounces Back
The fact that stocks remain weaker despite softening inflation is reflective of the broader risk-off tone to markets currently but also suggests some caution around the fact that CPI remains at elevated levels. Looking at the breakdown of the data, food prices were a big upside contributor, bouncing back to 4.9% after having fallen to 4.5% over the prior month. Given that the BOE has voiced concern around food prices, the rebound this month is certainly a worrying sign.
BOE Expectations
On the back of the last BOE meeting, traders are widely expecting the BOE to cut rates by a further .25% next month. Today’s data seems unlikely to derail those expectations though given the lack of conviction among policymakers (5-4 hold last time); any further upside data surprises might see the bank keeping rates on hold again. Ahead of that meeting, next week’s November budget will be another key factor to consider in whether we see an end of year cut.
Technical Views
FTSE
The sell off in the FTSE has seen the market trading back down to test the rising trend line from YTD lows and the 9,579.2 level. This is a key pivot for the market and a break below here will turn focus to the 9,343.9-level next, in line with bearish momentum studies readings.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.