Global stock-markets were generally lower last week with inflation, interest rates and oil prices the focus for investors. The price of oil rose strongly throughout July and into August as OPEX, Saudi Arabia and Russia restrained supply and an improving economic outlook in the US potentially lifting demand. Oil traders will be closely watching the release of industrial production data from China on Tuesday.
US annual inflation data came in lower than expected at 3.2% last week (3.3% forecasted) but still this was the first higher reading after twelve months of falls. With both headline and core inflation coming in below expectations, stocks rallied initially but fell back later in the day as enthusiasm waned. The week ended on a subdued note after data on Friday showed that US Producer Prices had risen more than expected. The yield on the US 10-year Treasury rose back above 4% and is today (Monday) approaching the nine-month high of 4.2% set earlier in August.
In the UK, data showed that the economy expanded 0.2% in the second quarter, beating forecasts. On a month-to-month basis UK GDP expanded 0.5% in June, it’s largest growth rate since October – again indicating that the economy grew more strongly than expected although over the longer-term still at a lacklustre pace. The Pound rallied a little but has resumed it’s recent downtrend today. The yield on the 10-year Gilt was up strongly on Friday closing at 4.527% (this year’s high was 4.717% in July). Note: UK inflation data is due for release this Wednesday.
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