Global stocks were mixed on Tuesday and as fresh data showed that US inflation had cooled on an annual basis in November.
The data from the Bureau of Labor Statistics, which will set the tone for a week filled with central bank meetings, showed prices rose 3.1% over the prior year in November, a slight deceleration from October’s 3.2% annual gain.
Economists had expected the Consumer Price Index (CPI) to come in flat month-over-month and rise 3.2% year-over-year, according to data from Bloomberg.
As expected, lower energy costs held the headline figures to a smaller gain, with energy prices dropping 2.3% month-over-month and 5.4% on an annual basis. This was dragged down by falling gas prices, which declined 6.0% during the month of November.
The S&P 500 (^GSPC) fell 0.2% then rose back up to trade 0.2% higher, the Dow (^DJI) ticked up 0.3% and the Nasdaq (^IXIC) was up 0.3%.
The FTSE 100 (^FTSE) rose 0.1% by the closing bell, while the CAC 40 (^FCHI) in Paris fell was almost flat. In Germany, the DAX (^GDAXI) was up 0.1%. The Stoxx 600 (STOXX) opened muted but has since slipped into negative territory.
UK stocks were higher as data showed wage growth slowing and job vacancies falling, signalling the Bank of England could cut interest rates soon to boost the economy.
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Overnight in Asia, the Hang Seng (^HSI) in Hong Kong rose 1.2% to 16,397 while the Shanghai Composite (000001.SS) climbed 0.4% to 3,003 points. Tokyo’s Nikkei 225 (^N225) also finished in the green, advancing 0.2% to 32,843 points.
Producer prices in Japan have risen at a faster-than-expected pace, notching a 0.3% gain year-on-year compared with the 0.1% rise estimated by economists polled by Reuters.
Meanwhile, oil prices rose amid doubts about whether production cuts by OPEC+ next year will balance the crude oversupply and slowing fuel demand growth.
West Texas Intermediate (CL=F) was trading 3.4% lower by the close in London. Brent (BZ=F) crude was 3.2% lower.
US stock futures held steady near their 2023 highs on Tuesday, ahead of the release of a key inflation report likely to factor into this week’s Federal Reserve policy meeting. My colleague Karen Friar writes:
Dow Jones Industrial Average (^DJI) futures edged up roughly 0.1%, while S&P 500 (^GSPC) futures were little changed. Contracts on the tech-heavy Nasdaq 100 (^NDX) rose about 0.1%, after all three major gauges closed Monday at their highest levels since early 2022.
Caution prevailed in the countdown to the Consumer Price Index update for November due later, one of the last economic inputs the Fed will get before its interest rate decision on Wednesday.
Investors are widely expecting a pause to rate hikes at the end of the central bank’s two-day meeting, which starts Tuesday. But traders are easing back on their bets on a rate cut in March, according to CME FedWatch data.
Google (GOOG) – Google chalked up its latest antitrust loss on Monday, following Fortnite maker Epic Games’ claims the search engine used its dominant position to take advantage of app developers for profit. A jury in San Francisco reached the verdict unanimously in less than four hours.
AstraZeneca (AZN.L) – Pharma company AstraZeneca’s stock was up 1% in early trade on Tuesday as it said it had agreed to buy infectious disease vaccine developer Icosavax. The deal is valued at up to $1.1bn (£876.6m) and is set to strengthen AstraZeneca’s RSV vaccine portfolio.
Hargreaves Lansdown (HL.L) – Hargreaves Lansdown shares slid more than 8% on Tuesday morning in London after the UK’s Financial Conduct Authority (FCA) expressed concerns about investment platforms’ charges to customers. Peer AJ Bell (AJB.L) also lost 6.8%.
Broadcom (AVGO) – Chipmaker Broadcom shares rose after Citi resumed coverage with a “Buy” rating. Broadcom’s VMware deal and core strengths, plus AI opportunity, underpin Citi’s bullish view.
Read the full story here
The BoE is widely expected to leave rates on hold on Thursday, at its final scheduled meeting of the year.
Danni Hewson, AJ Bell head of financial analysis, said:
“The big question was whether there’d be anything in this latest set of jobs figures to trouble Bank of England rate setters when they meet later this week.
“The answer is a resounding no and taking a look at market expectation another no-change decision looks almost nailed on.
“As the economy has cooled so has that record pace of wage growth which had so troubled MPC members.
“Whilst the labour market is still showing remarkable resilience, pressure on employers to keep relaxing those purse strings has eased.
UK regulators investigating Unilever’s green claims
The UK’s competition watchdog has opened an investigation into whether Unilever (ULVR.L) is making environmental claims that do not stack up when marketing some of its cleaning products and toiletries.
The Competition and Markets Authority (CMA) said it had found “a range of concerning practices” after investigating the £140bn fast-moving consumer goods market.
It is now launching a formal investigation into Unilever, one of the largest players in the sector which makes products such as Cif, Dove, Comfort and Lynx.
The CMA said that some of the statements and language used by Unilever “appear vague and broad” and might mislead shoppers about the products’ environmental impact.
“Claims about some ingredients are presented in a way that may exaggerate how ‘natural’ the product is, and so may create an inaccurate or misleading impression,” the CMA said.
Bank of England to hold rates on Thursday, says Quilter
Richard Carter, head of fixed interest research at Quilter, said the Bank of England will hold interest rates at 5.25% on Thursday as the MPC will want to see further cooling in wage growth before it starts to cut rates:
“This dip in pay suggests the Bank of England’s previous interest rate decisions are beginning to have the desired effect and it will likely feel vindicated to continue to hold rates higher for longer as a result.
Though today’s figures suggest another step has been taken in the right direction, the Bank will be keen to see a significant slowdown in wage growth before it begins to contemplate the possibility of cutting interest rates.
The Financial Conduct Authority (FCA) said it was concerned about the amount of interest and fees charged by some investment platforms and has written to 42 firms warning it could intervene to ensure fair value.
The watchdog found the majority of these firms retain some of the interest earned on these cash balances, which may not “reasonably reflect” the cost to firms of managing the cash.
Many also charge a fee to customers for the cash they hold, known as “double dipping,” the FCA said.
The FCA is concerned these practices may not be providing “fair value” to customers and may not be understood by consumers or properly disclosed.
Chancellor Jeremy Hunt said:
“It’s positive to see inflation continue to fall and real wages growing.
“At the autumn statement, I announced an ambitious set of measures to get more people into work and boost economic growth.
“This includes a significant expansion of health support and an over £9bn per year tax cut for employees and the self-employed, worth over £450 for the average worker.”
Pay growth has eased back at the fastest pace for two years, while vacancies dropped further in the longest run of declines on record, according to official figures.
The Office for National Statistics (ONS) said private sector regular earnings, excluding bonuses, rose by 7.3% in the three months to October, down from 7.8% in the previous three months.
This was the steepest fall in earnings growth since the three months November 2021 and marks a further pull back from a record high of 7.9% in the summer.
But despite easing back, pay growth outstripped inflation at the fastest pace for more than two years, up 1.2% after taking Consumer Prices Index inflation (CPI) into account.
The figures could encourage policymakers at the Bank of England to cut interest rates soon to boost the economy.
Watch: CPI, PPI, Fed decision, retail sales: Market impact
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