Closing summary
The FTSE 100 index in London is scaling new peaks, currently 1% higher at 9,283.20, shrugging off higher-than-expected inflation data released first thing this morning.
Inflation rose to an annual rate of 3.8% in July from 3.6% in June, driven by higher air fares, petrol and diesel, and food prices, while the expected “Oasis effect” on hotel prices did not materialise.
On Wall Street, the tech-heavy Nasdaq has lost 1.3%. Traders are waiting for more clues on interest rate policy from the Federal Reserve’s Jackson Hole symposium, which starts tomorrow. Fed chair Jerome Powell is due to speak on Friday
Ministers have lined up special managers to run Liberty Steel’s South Yorkshire operations if they are put into administration, according to a dramatic revelation at London’s high court.
The development shows the government is ready to step in immediately to secure the continued operations of the Speciality Steel UK (SSUK), which employs 1,450 people at the group’s operations at an electric arc furnace in Rotherham and another plant in Stocksbridge, both in South Yorkshire.
Creditors to SSUK are seeking a compulsory winding up order, the high court heard on Wednesday. The company asked to adjourn the hearing to buy time to try to agree a “pre-pack” administration that would allow its owner, the metals tycoon Sanjeev Gupta, to keep control of the insolvent company.
Counsel representing the creditors showed the judge a letter from the Department for Business and Trade detailing that the government had said its official receiver was ready to carry out a sales process if the company entered administration.
Thank you for reading. We’ll be back tomorrow to bring you the latest news. Take care – JK
Markets are expecting the Fed to cut rates at its next meeting in mid-September.
However, Atakan Bakiskan, US economist at Berenberg Bank, is forecasting no change. What can we expect at Jackson Hole? He said:
Jackson Hole or black hole? The annual Jackson Hole conference – running from tomorrow through Saturday – has often served as a platform for Federal Reserve Chair Jerome Powell to deliver clear signals on upcoming monetary policy moves. Powell is scheduled to speak at 10am EST on Friday.
This year may prove different due to the unusual series of events and persistent uncertainty that have unfolded since Donald Trump took office in January. Recent economic data offers no clear direction for the federal funds rate. One the one hand, core CPI inflation rose to 3.1% yoy as of July (up from 2.8% yoy in March).
On the other hand, job growth slowed sharply, even as the labour market remains broadly balanced. Powell may avoid sending a definitive message and instead stress the importance of August inflation and employment reports in shaping the next rate decision. Both will be released before the 17 September meeting.
If Powell sounds less dovish than markets expect, front-end [bond] yields will likely rise and traders will trim their September rate cut expectations. We maintain our call for no Fed rate cut in September. Of course, the risks to our non-consensus call tilt to the downside. A weak August jobs report could force the Fed to cut even in the face of elevated inflation.
