Stocks wary, U.S. inflation decreased in May

Stocks wary, U.S. inflation decreased in May


The leading indices in the US ended trading on Wednesday with mixed performance against the decision of the Federal Reserve to raise interest rates. Dow Jones rose by 0.22%, reaching a new historic high of 21 374.56 points. S & P500 slid 0.1 percent after energy companies suffered losses of more than one percent as a result of poor performance in oil. The Nasdaq fell 25.48 points or 0.41% to 6 194.89.

In Europe, leading stock markets closed in red territory. The exception was DAX30, which realized a growth of 0.35%, recording a new record at 12 989.91 points after data on inflation in Germany fell short of economists’ expectations. The consumer price index remained unchanged from 1.5% yoy. European index, the change of the oil and gas, dropped by a percentage and a half. This is its weakest performance since December 2016 onwards. When shares French energy company EDF realized an increase of 3.2 percent. Meanwhile, shares of German Raiffeisen Bank fell by around 6%.

Oil prices tumbled to seven-month low after the data on gasoline stocks in the US showed a significant increase last week. For the period to June 9th gasoline stocks in the country rose by 2.096 million. Analysts’ expectations were for an increase of only 0.490 million.

At the same time oil stocks for the week to June 9 decreased by 1.6 million barrels. Gold tumbled nearly 4 percent to 44.73 dollars. Brent crude fell 3.5 percent to 47.03 dollars per barrel. “Oil was dragged down by data on gasoline stocks. The US industry continues to transform surplus crude oil in excess of gasoline. This puts pressure on the price of black gold,” said Andrew Lipou, who is president of Lipow Oil Associates in Houston.

Consumer prices in the US declined on a monthly basis in May, reported Bloomberg. The corresponding index recorded a decline of 0.1%, while expectations were no change. Previous month prices registered a 0.2 percent growth.

Yoy inflation also slowed from 2.2 percent in April to 1.9 percent in May. Estimates were for an increase of 2%.

Core inflation, which excludes food and fuel, remains stable in May level of 0.1% on monthly basis, which is by 0.1 percentage point below expectations. Yoy core inflation is 1.7%, which is the lowest level since May 2015 Forecasts were for a rise of 1.9%.

Bloomberg states that the data can be volatile, as they often depend on the prices of energy and food products. However, inflation slowed from 2.3% in January to 1.7% and this causes concerns that growth rates can be further away from the target level of the Federal Reserve (2%).

The drop in prices on a monthly basis was mainly due to energy, where the decline amounted to 2.7%.

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She is the Managing Editor for in-depth discussions and analysis as well as breaking news at Markets Morning. She works closely with Editor-in-Chief Zac Berry on content and publishing initiatives for the site. Brianna Clemons has worked as a financial journalist and editor since 1997. She lives in Bucks County, PA, with her husband, four young children and one dog.