US inflation moderating for the 10th month in a row

Updated inflation figures in the US, indicating a continued slowdown in price growth in April, did little to push the major equity indices out of their sideways grinds Wednesday – with the broad S&P 500 Index edging higher and tech-focused Nasdaq touching a more-than eight-month high.  Meantime, the Dow Jones Industrial Average lagged as the odds of a major change in the Federal Reserve’s rate posture appear slim.  Elsewhere, European equity markets fell yesterday, with the Euro Stoxx 50 Index down 0.4% dragged lower by food and beverages shares while tech equities advanced by over 1%. 

Summary for 11.05.2023 

• Most Asian equities moved in a flat-to-low range on Thursday as softer-than-expected Chinese inflation data pointed to a slowing economic rebound in the region’s largest economy.   
• European and US shares are poised to nudge higher later today as investors weigh fresh inflation data out of the US and China while looking ahead to producer inflation figures.  
• Oil prices rose this morning, recouping some losses from the previous session as EIA data showed that US gasoline inventories declined by 3.2 million barrels last week, exceeding forecasts for a 1.2 million barrel draw and suggesting fuel demand in the world’s top oil consumer remained robust. 

• China’s consumer inflation slowed to the weakest pace in two years in April while producer prices fell deeper into deflation. The consumer price index rose 0.1% last month from a year earlier, reflecting muted domestic demand as well as base effects from last April’s Shanghai lockdown. Core CPI was unchanged at 0.7%. Producer prices fell 3.6% in April as commodity costs softened. The figure was more than March’s drop and deeper than economists had expected. 
• The US Labour Department yesterday reported the Consumer Price Index (CPI) rose 0.4% in April from the month before, in line with what economists were expecting.  Core CPI rose by a similar magnitude.  Compared with the same month a year earlier, CPI was up 4.9%, which was the slowest annual rise since April 2021.  However, few market watchers seem to think this slowdown will be enough to tempt the Fed into loosening up interest rates.   
• Stubborn double-digit inflation is set to force the Bank of England into a 12^th straight interest rate rise on Thursday even though the end of its lightning-quick hiking cycle is coming into view.  Economists and investors expect the Monetary Policy Committee to back another quarter-point boost in the Bank rate to 4.5%, the highest since 2008.  Red-hot price and wage data have so far raised the risks of the BOE continuing its hiking cycle through the summer. 
• Walt Disney reduced losses in its streaming media unit by more than $400 million from the prior quarter, the company said on Wednesday as it reported earnings in line with Wall Street expectations.  Overall, EPS came in at 93 cents, meeting the consensus analysts’ forecasts while revenue hit $21.82 billion, slightly above analysts’ projections of $21.79 billion.  Shares fell more than 4% in extended trading.