Wall Street was subdued at the open today as investors awaited Federal Reserve Chair Jerome Powell’s remarks for hints on how the central bank is balancing inflation risk with its promise to ensure a jobs market recovery.
The Dow Jones Industrial average fell 0.3 per cent, while the S&P 500 lost 0.05 per cent. Meanwhile, the Nasdaq advanced by 0.1 per cent as tech stocks stayed in the green.
In Powell’s proposed remarks released yesterday afternoon, he said inflation has “increased notably in recent months” but regarded it as temporary.
“The Fed, and particularly Powell, are going to continue to talk to the transitory nature of inflation,” said Tony Minopoli, chief investment officer at Knights of Columbus Asset Advisors.
“We are at this inflection point where employment is getting better and we move from a stimulus-driven economic situation to a more traditional, consumer-led growth.”
The Fed chief is due to speak before Congress at 6pm UK time.
London’s FTSE 100 rose today as investors hoped that the central bank will keep interest rates at record lows despite a recent flare-up in inflation.
The blue-chips climbed 0.3 per cent this afternoon, as heavyweight energy stocks tracked a jump in oil prices.
Meanwhile, the mid-cap FTSE 250 advanced 0.8 per cent, as National Express saw shares rise by 2.9 per cent after announcing the acquisition of Spanish bus firm Rober.
British public borrowing fell in May from high levels of a year earlier when the government ramped up a huge spending response to the pandemic.
Some investors believe there are signs that the recent recovery in the economy was boosting tax revenues.
The afternoon’s biggest winner was Land Securities Group, who rose by seven per cent, followed by British Land, up by 5.5 per cent.
Miners Antofagasta and Glencore also rose by four per cent and 3.1 per cent respectively.
Standard Chartered was the afternoon’s biggest faller, dropping by one per cent, followed by Compass Group’s 0.9 per cent hit.
Meanwhile, GlaxoSmithKline and Intermediate Capital Group both dipped by 0.8 per cent and 0.7 per cent respectively.
Around the world
Global shares extended their recovery from four-week lows today as investors focused on prospects for post-Covid economic growth.
MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 0.4 per cent, while Japan’s Nikkei posted its biggest gains in a year, rising 3.3 per cent.
Australian stocks shot up 1.6 per cent, while Chinese and South Korean shares jumped 0.8 per cent and 0.7 per cent respectively.
Meanwhile, the EuroStoxx 600 advanced 0.1 per cent at the open, with banks, miners and energy stocks leading the gains.
Investors will now turn their attention to the US labour market as its performance is likely to influence the Federal Reserve’s policy stance.
In the immediate hours ahead, all eyes are on Fed Chief Jerome Powell who appears before Congress this evening.