Rate hike worries weigh on UK shares

New data released yesterday shows U.S. inflation rose by a whopping 9.1% year-over-year in June, with core inflation falling 0.1% to 5.9%. This was way above economist expectations.

Now, investors are worried that the Fed’s FOMC will decide to raise rates by as much as 1.0% at its next meeting on July 27, and at least 0.75%.

South Korea and New Zealand raised their rates by 0.50% yesterday, while Canada followed decided to go with a 1.0% increase.

Meanwhile, the Euro fell to parity with the US dollar for the first time in two decades.

The FTSE 100 was down 0.5% this morning, fueled by worries over the impact of inflation and rate hikes on the global economy.

Among stocks, homebuilder Barratt Developments dropped 3.8%, after a survey showed British house prices rose at their slowest pace in more than a year.

 

Things to read today:

Soaring US inflation puts pressure on Fed to abandon guidance again (Financial Times)

All Crisis Scenarios Lead to Rome as ECB Starts Raising Rates (Bloomberg)