US markets mixed as consumer prices hit 30-year high

US markets were mixed as investors digested consumer inflation numbers. Photo: Richard Drew/AP
US markets were mixed as investors digested consumer inflation numbers. Photo: Richard Drew/AP

US markets were mixed as inflation figures showed that consumer prices had gained steam in June, as the demand outpaced the supply for labour and materials and the economic recovery picked up.

Official figures show that last month's consumer price index jumped 5.4% from the same time last year. This is the highest 12-month rate since August 2008 and the highest core level in 30 years.

The index was up a seasonally adjusted 0.9% in June from May — the highest one-month change since June 2008.

Among goods that jumped in price, airline fares and clothes were among the top risers.

Following the bumper day, the US's three major indices were mixed. The S&P 500 (^GSPC) was 0.1% up, while and the Dow (^DJI) fell 0.1%. The Nasdaq (^IXIC) was up 0.5%.

The Nasdaq, Dow and S&P 500 had all registered record closes on Monday.

"The biggest psychological achievement came from the Dow Jones Industrial Average, which flirted with 35,000 before closing slightly below," said Peter Essele, head of investment management for Commonwealth Financial Network. "The index has returned 93% since the market low in 2020, a level of return few would have predicted in the early days of the pandemic."

"Further direction for the markets may come from across the pond and the start of the US second quarter earnings season – with numbers from US banking giants JP Morgan Chase and Goldman Sachs. American inflation figures may also help set the tone for the coming days,” said AJ Bell financial analyst Danni Hewson.

Meanwhile, European markets had fallen by the close, making muted moves after the UK's final stage of easing of coronavirus restrictions was confirmed as going ahead on 19 July.

The FTSE 100 (^FTSE) was 0.1% lower in London, while Germany's DAX (^GDAXI) and France's CAC (^FCHI) were also marginally lower.

The final stage of restrictions easing in the UK means almost all legal restrictions on social contact will be removed.

Despite moving to the next stage, prime minister Boris Johnson urged caution in a press conference on Monday evening. "This pandemic is not over," he said.

Health secretary Sajid Javid also said on Monday that although legal requirements on face coverings were being lifted, they were "expected and recommended" in crowded indoor areas

The current wave of coronavirus infections is not expected to peak before mid-August, and could mean between 1,000 and 2,000 hospital admissions a day, government scientists said.

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Overnight in Asia, markets closed higher, with Hong Kong's Hang Seng (^HSI) buoyed 1.7%. Investor confidence grew off the back of the People's Bank of China lowering cash ratio requirements of the banking system to free up liquidity.

Meanwhile, Japan's Nikkei (^N225) was up 0.5% and the SSE Composite (000001.SS) advanced 0.4%.

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