Stock market reacts after US consumer inflation drops
European stocks experience a minor decline while markets in China and Hong Kong were closed for holidays
As President Joe Biden’s administration grapples to manage living costs while he seeks reelection, the U.S. consumer inflation slowed less than anticipated last month, leading to a decline in stock futures.
The closely watched Consumer Price Index rose 3.1% from a year ago in January, down from 3.4% in December, the Department of Labor said.
A measure stripping out volatile food and energy costs held steady, too, despite expectations it would ease.
As the inflation data poured in, Stock futures declined, with contracts tied to the tech-heavy Nasdaq-100 leading the way.
The yield on the 10-year Treasury note rose after the report to 4.297%.
Meanwhile, Bitcoin hovered around $50,000 after crossing that threshold Monday for the first time in over two years.
Overall inflation ticked up 0.3% from December to January, an acceleration from the November to December figure.
“The index for shelter continued to rise in January, increasing 0.6% and contributing over two-thirds of the monthly all items increase,” said the Labor Department in its report.
The food index increased over the month, even as energy costs slumped because of lower gas costs.
The U.S. Federal Reserve rapidly hiked interest rates in 2022 to quell an inflation surge.
It is now holding the rate at the highest level in over two decades, seeking to bring inflation back to 2% over the long haul.
European stocks fell slightly
While markets in China and Hong Kong were closed for holidays, European stocks experienced a minor decline.
On the other hand, Japan’s Nikkei hit a fresh 34-year high, climbing 2.89% to 37,963.97, its highest since January 1990, CNN reported.
The dollar hit 150 against the yen for the first time since November after data showed U.S. inflation hotter than expected in January, reinforcing expectations that the Federal Reserve will hold interest rates in March.
The Consumer Price Index (CPI) rose 0.3% every month in January, above the 0.2% increase expected by economists polled by Reuters.
Source: Newsroom & Agencies
