UK inflation reading is cause for concern

Stronger-than-expected wage growth in Britain fuel worries that more rate hikes are on the way from the bank of England. A 25bps rate hike is widely expected in September, and another one in November. Meanwhile, oil and metal stocks fell yesterday after China release disappointing figures for industrial production and retail sales in July, and announced a surprise rate cut. The FTSE 100 fell 1.6%.

The mood hasn’t improved today after data from the Office for National Statistics revealed that underlying inflation stayed high last month in the UK, although the overall consumer price index (CPI) slowed to 6.8% year-on-year, down from 7.9% in June - in line with expectations. Core inflation remained at 6.9% in July, the same reading as June, and higher than the Reuters consensus of 6.8%. Services inflation climbed to 7.4% from 7.2% in June.

The FTSE 100 fell 0.2% in early trading. Among stocks, Marshalls shares fell 1.1%, after the company posted a 26% drop in half-year profit.

Things to read today:

China is becoming more trouble than it’s worth for US investment banks (Financial Times)

AI Wave Boosts Returns for Norway’s $1.4 Trillion Wealth Fund (Bloomberg)