Closing post
Time to recap.
Stock markets on both sides of the Atlantic have rallied, after a softer-than-expected US inflation report bolstered hopes of cuts to interest rates.
America’s S&P 500 index, and the Nasdaq, are both up around 1% after hitting new highs today, as investors celebrated the news that US inflation was lower than expected last month – at 3%, below forecasts of 3.1%.
In London, the FTSE 100 share index has just closed at a record high of 9645.62 points, a rise of 0.7% or 67 points today.
Joe Mazzola, head of trading & derivatives strategist at Charles Schwab, explains why Wall Street is expecting rate cuts:
“After weeks without any official economic data due to the government shutdown, Friday’s inflation data did little to change expectations for the Fed’s rate cut path, with price increases coming in cooler than expected and reinforcing expectations that the Fed will cut rates next week and again in December in response to a weakening labor market.”
In other news:
The latest poll of purchasing managers at British firms has found that growth is picking up after the lull in September, spurring hopes that the UK economy is improving.
NatWest bank has reported a 30% jump in pre-tax profits.
Sales at UK retailers rose unexpectedly last month to their highest level since July 2022, according to official figures, boosted by tech purchases amid the release of the new iPhone 17 as well as strong online demand for gold.
Flash US PMI signals strong start to fourth quarter
The US economy had made a strong start to the fourth quarter, but bosses are still nervous, new economic data shows.
US business activity growth accelerated in October to the second-fastest so far this year, according to a poll of purchasing managers at American companies.
S&P Global’s ‘flash’ PMI data shows there was a rise in new business this month, with both manufacturing companies and service firms reporting improvements in output and new work.
Less encouragingly, business confidence worsened, principally reflecting ongoing concerns over the impact of government policies such as tariffs, S&P Global says.
Chris Williamson, chief business economist at S&P Global Market Intelligence, explains:
“October’s flash PMI data point to sustained strong economic growth at the start of the fourth quarter, with business activity picking up momentum across both manufacturing and services despite some reports of businesses being adversely impacted by the government shutdown.
The survey data are consistent with the economy expanding at a 2.5% annualized rate in October after a similar rise was signalled for the third quarter.
However, business confidence in the outlook for the coming year has deteriorated further, and is at one of the lowest levels seen over the past three years as companies worry about the impact of policies, most notably tariffs.
Updated
