FTSE 100 struggles for direction as markets await key inflation data

Investors await key inflation figures in the UK and US; fears of rising prices caused stocks sell-off last week
Headline inflation in the UK expected to cool to 2.9pc but core CPI will show that domestic pressures are building, economists forecast; release due at 9.30am
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Global stocks rebound stutters; commodity stocks help FTSE 100 nudge up
European markets struggle to gain traction
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'Lack of conviction' in global stocks rebound
The global stocks rebound has faltered this morning despite a solid session on Wall Street overnight.
The FTSE 100 is the sole blue-chip index in Europe to move higher this morning with the DAX and CAC 40 across the Channel slipping 0.2pc and 0.3pc, respectively.
The stumble shows that there has been a lack of conviction in the rally and thin trading volumes in New York yesterday indicate that "there is not a huge amount of interest in this recovery just yet", according to ETX Capital analyst Neil Wilson.
He explained:

"US stock market volumes last week were the highest since August 2011 and the sharp rally on Friday was also marked by a surge in volumes.
"But it was much thinner on Monday, although market breadth was decent yesterday with advancers outnumbering fallers by about two-to-one. Lack of volume yesterday suggests we are yet to build consensus around this rally and it could run into trouble if conviction is lacking." 
Inflation forecast to nudge down despite Bank of England lifting inflation forecasts
2. Still the one to watch - core inflation. It's expected to have risen slightly in January to 2.6%y/y from 2.5%y/y. Question mark remains over just how quickly sterling's post-Referendum fall will wash out this year.— Rupert Seggins (@Rupert_Seggins) February 13, 2018
Economists expect inflation to ease to 2.9pc this morning but the Bank of England admitted on Thursday that CPI could climb higher than 3pc in the coming months.
Core inflation is expected to confirm that some domestic inflationary pressures are building after several closely-watched business surveys noted a rise in prices in January.
Michael Hewson of CMC Markets gave his two cents on what the release could mean for the Bank of England:

"Last week’s inflation report caught markets on the hop a little with its unexpectedly hawkish message about the prospect for interest rates, in the months ahead.  
"The latest January PMI data would appear to show an economy that has hit a bit of a soft patch, yet for all of that, the tone of last week’s inflation report would suggest that the MPC may well be more worried about the inflation outlook than they would like to admit."
Agenda: FTSE 100 struggles for direction as markets await key inflation data
FTSE 100 struggles for direction as markets await key inflation data

The Bank of England admitted last week that it will have to accelerate plans to hike interest rates 
Investors are eyeing key inflation figures in the UK this morning as the Bank of England begins to prepare markets for an early interest rate rise in May.
Although the headline inflation figure is expected to have nudged down to 2.9pc for January, economists believe core inflation — which strips out food and fuel prices — will show domestic inflationary pressures building.
After the global sell-off was sparked by fears that rising prices would force central banks to hike rates quicker than anticipated, the markets are on edge ahead of inflation figures also due in the US tomorrow.
Global stocks rebound stutters. Japanese equities fall as yen advances and S&P 500 futures trade lower. Govt bonds rally w/ 10y US Treasury yields drop to 2.83% and 10y Bund yields to 0.74%.— Holger Zschaepitz (@Schuldensuehner) February 13, 2018
The Bank of England lifted its inflation forecasts last week and strongly hinted that it will raise rates soon to head off rising prices. The pound is mixed on currency markets ahead of the release, climbing 0.3pc against the dollar to $1.3860.
The global stocks rebound has slowed this morning despite another session on Wall Street finishing in positive territory. Asian stocks stuttered overnight with the Nikkei 225 in Tokyo tumbling 0.7pc.
Commodity stocks are helping the FTSE 100 nudge higher but markets in Europe are struggling to maintain their momentum.
Trading statement: TUI
Economics: Inflation data (UK)



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