AJ Bell press comment – 13 September 2022
Danni Hewson, AJ Bell financial analyst, comments on the latest US inflation numbers:
“You could see exactly how unhappy investors were with the latest US inflation numbers – within minutes of the hotter than expected CPI data landing markets took something of a nosedive. 8.3% is a fall on the previous month but the expectation had been for prices to slow more quickly and when you strip out food and energy and look at that core number it was up a touch on July’s figures, a fact you can be certain will draw the attention of US central bankers.
“There’s been a lot of talk about how today’s data might impact the Fed’s upcoming rate decision, but in truth the consensus is still overwhelmingly for a 75-basis point hike next time out. Central bankers have been clear that throwing a cold bucket of water on sizzling prices is their priority and there’s a long way between where the US economy currently stands and the much discussed 2% target.
“And whilst lower prices at the pump are of psychological importance to US motorists and have a knock to transportation costs, ordinary Americans won’t be feeling much respite just yet. Food and electricity prices – the price of keeping a roof over your head – are still heading in the wrong direction and that’s going to weigh on policy makers.
“Opening bell delivered the expected Wall Street slump, and it was tricky to find any stock on the Nasdaq in any colour other than red.
“London markets didn’t escape the afternoon collapse with a whole host of retailers in the doghouse helped along by a weak trading update from Ocado and no one will have been surprised to see US tech connoisseur Scottish Mortgage Investment Trust tumbling either.
“Tomorrow we learn the UK’s inflation trajectory and while the number now seems woefully out of date with the expectation that the anticipated highs are no longer on the cards, digging into where those prices have been climbing higher may help to understand how the government’s new energy price fix will really shake down.
“Will people really have all that extra cash to spend on those little extras or are UK households going to find that while they’ve jumped out of one pan, they’ve landed right back in another.”
