Closing post
A quick recap
More clouds are gathering over the US economy, as new data shows a rise in joblessness as inflation picks up.
Applications for US unemployment benefits jumped last week to the highest level in almost four years; Initial claims rose by 27,000 to 263,000 in the week to 6 September, the highest since October 2021.
This latest sign of a weakening jobs market has pushed shares higher on Wall Street, as investors anticipate cuts to US interest rates.
That’s despite US inflation rising in August, with the consumer prices up by 2.9% over the last year, up from 2.7% in July.
Rising food and housing costs were a factor, while economists warned that companies were passing on the cost of tariffs to consumers.
In the eurozone, the European Central Bank has left interest rates on hold today, while nudging some of its growth and inflation forecasts a litte higher.
In the UK, the owner of John Lewis and Waitrose has said its losses nearly tripled to £88m in the first half of this year, as it took a hit from restructuring costs as well as new tax and regulatory charges.
John Lewis Partnership, which operates 36 department stores and more than 300 Waitrose supermarkets, said new packaging regulations and increased national insurance contributions had cost it £29m, while it spent £54m on restructuring its business, mainly on replacing outdated technology.
As a result, the employee-owned group’s half year pre-tax losses widened from £30m over the same period a year before, despite a 4% rise in sales to £6.2bn in the six months to 26 July.
Wall Street opens higher on rate cut hopes
Wall Street’s main indexes have opened higher, despite today’s data showing a jump in unemployment claims and consumer prices.
Rather than worrying about the state of the labor market, traders seem to be betting that the US Federal Reserve is on track to cut interest rates next week.
The Dow Jones industrial average has risen by 218 points, or 0.5%, in early trading to 45,708 points.
The broader S&P 500 index is 0.25% higher.
Analysts at ING agree that the Fed’s focus is now the jobs market.
James Knightley, ING’s chief international economist, explains:
Inflation was a touch higher than expected and tariffs are likely to keep it elevated over coming months, but the the weakening of the jobs market is now the Fed’s priority, with rising jobless claims hinting at a pick-up in lay-offs at a time when hiring is subdued
