Quarterly results and the slowdown in US inflation fail to boost the stock markets. IBM plummets, WTI closes up 1.19%
The better-than-expected figure of 3.5 per cent is fuelling expectations of a less restrictive Fed. Trump has scrapped the 20 per cent tariff on Hormuz, slowing the rally in crude oil prices. The FTSE MIB in Milan closed up 0.1 per cent
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(Il Sole 24 Ore Radiocor) - The slowdown in US inflation, which stood at 3.5 per cent in June against expectations of 3.8 per cent, and the massive profits posted by US banks were not enough to lift European stock markets, which ended the session on a cautious note. The FTSE MIB in Milan finished up 0.1%, with the Frankfurt DAX at a similar level (up 0.12%), whilst the Paris CAC lagged behind (up 0.03%). The AEX in Amsterdam closed up 0.4 per cent, the IBEX in Madrid up 0.2 per cent, as did the FTSE 100 in London.
Markets remain concerned about tensions in the Middle East, but the U-turn by US President, Donald Trump, on the 20 per cent tax for the use of the Strait of Hormuz is slowing the oil rally. “Following very productive discussions with Middle Eastern leaders, I have decided to replace the 20 per cent levy payable to the United States with trade and investment agreements that the various Gulf states will enter into with the United States,” the President said.
Wall Street closes higher: DJ +0.02%, Nasdaq +0.90%
Wall Street closes higher. The Dow Jones rises by 0.02% to 52,508.66 points, the Nasdaq gains 0.90% to 26,107.01 points, whilst the S&P 500 recorded a gain of 0.38% to 7,543.88 points.
The Consumer Price Index rose by 3.5 per cent year-on-year, following a 4.2 per cent increase in May. On a month-on-month basis, it fell by 0.4 per cent, the sharpest decline since April 2020. Expectations had been for a rise of 3.8% and a fall of 0.2%, respectively. In the equity market, shares in IBM shares plummeted after the hardware, software and consultancy services provider published preliminary second-quarter results that fell short of expectations.
Warsh: regime change to eliminate the inflation ‘tax’
Describing inflation as an ‘unfair burden’, Federal Reserve Chairman Kevin Warsh reiterated his call for a ‘change of regime’ at the central bank. ‘It is a tax on American citizens and businesses. We intend to get rid of this tax”, he said. “This means we need a change of regime in monetary policy and a reassessment of practices, some of which have worked, others have not.” Speaking at a congressional hearing, Warsh stepped up his recent critical stance on inflation, whilst emphasising the strength of the US economy and the benefits of business investment, particularly in the field of artificial intelligence. Warsh also pledged to ‘get monetary policy right’ and tackle inflation, which has plagued the central bank for the past five years.
