UK CPI unexpectedly slows; GBP falls

(CPI)UK consumer inflation

UK consumer inflation unexpectedly fell in August. The consumer price index came in at 6.7% year-over-year (YoY). The market anticipated a 7% rise, after 6.8% the previous month. Core CPI growth slowed to 6.2% in August from 6.9% in July. Only a marginal fall to 6.8% was expected. The reaction on the currency market was instant. The pound fell against major currencies.

The People's Bank of China

Earlier on Wednesday, the People's Bank of China kept its leading rates unchanged this month, as expected. One-year and five-year loan prime rates remain at 3.45% and 4.2%, respectively, as policymakers assess the impact of previous easing measures. The latest data suggests the Chinese economy is showing signs of stabilisation, yet some economists think that more policy stimulus, including cuts to loan prime rates, is likely in the coming months.

The Federal Reserve

On Wednesday evening, it will be the Fed's turn to decide rates; it is widely expected to keep rates steady. The Fed funds target rate range is to remain between 5.25% and 5.5%. The bigger question is whether the Fed is done with rate hikes. Futures prices show traders are expecting the central bank to begin cutting rates by September 2024.

Japan trade deficit

In Japan, the trade deficit narrowed sharply compared to the same month last year. The trade deficit came in at ¥930.5 billion in August. A year ago, the deficit was three times larger. Exports fell for a second straight month, by 0.8%, amid weak foreign demand, particularly from China. In late August, China imposed an import ban on Japanese seafood. Food exports to China have fallen by 41.2%, the sharpest drop in 12 years.

Dunelm

On the equity market, Dunelm expects higher sales volumes to drive profits in 2024, after its annual profit beat analysts' expectations for profit. Dunelm posted a profit before tax of £192.7 million. Sales reached £1.64 billion. Dunelm proposes a final dividend of 27 pence, taking the total dividend to 42 pence.

General Mill

Over in the US, General Mills is expected to report its earnings for the first quarter before the market opens. The maker of Cheerios cereals is seen posting a 2.7% decline in earnings to $1.08 per share. Revenue is forecast to rise 3.5% to $4.89 billion. The bottom line continues to suffer from elevated input costs. In the fourth quarter, input cost inflation reached 9%. For 2024, General Mills expects input cost inflation of 5%.

FedEx

FedEx is due to report quarterly earnings after the market closes tonight. Earnings for the first fiscal quarter are expected at $3.70 per share, compared to $3.44 posted the same quarter a year ago, a result of FedEx's cost-cutting costs initiatives. Revenue is, however, expected to decline to $21.73 billion from $23.20 billion a year ago.

Oil prices

Oil prices have lost about $2.5 after setting a fresh 10-month high on Tuesday afternoon. API inventory data didn't impact prices much, despite a sharp drop in crude oil stocks.

Crude inventories

Crude inventories fell by 5.25 million barrels last week, twice as much as what analysts had anticipated. Distillate stocks also fell by a quarter of a million barrels. Only gasoline stocks saw a rise of 730,000 barrels.