The FTSE 100 (^FTSE), US stocks and European indices lost ground by Friday afternoon, capping off a wild week, with eyes trained on the oil price and the latest macroeconomic data.
Traders are digesting slowing economic growth in the US and sticky inflation, with rate cut expectations weighed against increasingly high energy prices due to the US-Iran conflict.
Personal consumption expenditures (PCE) index data released on Friday by the Bureau of Economic Analysis — and covering January, before the war began — showed that headline prices rose by 0.3% in January over the previous month.
So-called “core” PCE, which excludes more volatile food and energy prices, rose 0.4% on the month, in line with 0.4% the month before. Economists had also predicted that the Fed’s preferred inflation measure would rise by 0.4%.
Data out on Friday morning also showed that US economic growth slowed more than initially thought in the fourth quarter of last year after the measure came in sharply under expectations in an initial reading.
Meanwhile, Donald Trump has attempted to diminish fears about volatile oil prices, giving the temporary green light for countries to buy sanctioned Russian oil and petroleum that is currently loaded on vessels at sea.
Brent crude futures (BZ=F) were above the $101 per barrel mark, or about 1% higher. In the last month brent is up more than 50%. West Texas Intermediate futures (CL=F) rose to $96.50 – holding onto a month-on-month gain of 53%.
Oil prices have spiralled over the previous weeks amid the mounting US-Iran conflict. Shipping in and out of the Strait of Hormuz has become a flashpoint, with movements of ships carrying oil (BZ=F, CL=F) and commodities such as fertiliser through the passage halted due to dangerous conditions.
Earlier in the week, US forces reportedly sank 16 Iranian vessels suspected of laying mines near the Strait.
-
FTSE 100 (^FTSE) fell 0.5% by the end of the session following a GDP reading for January from the Office for National Statistics that suggests the economy stagnated. Mining giant Fresnillo was among the top fallers
-
The FTSE 250 (^FTMC) was 0.4% lower
-
Over in Germany, the DAX (^GDAXI) traded 0.8% lower
-
France’s CAC 40 (^FCHI) was also 1% in the red
-
The pan-European STOXX 600 (^STOXX) ticked down 0.6%
-
The pound fell about 0.6% against the dollar (GBPUSD=X), still trading near the $1.32 mark. The dollar index (DX-Y.NYB), which tracks the greenback against a basket of currencies, gained 0.6%
-
The Dow Jones Industrial Average (^DJI) was just above the flatline. The S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) fell 0.3% and 0.6% respectively
LIVE 16 updates