US and European Indices Perform Strongly

Posted on | September 16, 2009 |

The Dow has opened marginally higher this afternoon, while Europe’s leading indices have maintained their strong morning performance.

At 3.30pm (London time), the Dow had inched 18.51 points (+0.19%) ahead to 9701.92, after closing at its highest level in 11 months on Tuesday, while the S&P 500 was up by 4.03 points (+0.38%) to 1056.66.

Following Ben Bernanke’s comments yesterday evening that the recession across the Atlantic is nearing its end, US markets received a further double boost today from the latest inflation reading, and after industrial production rose for a second successive month in August. [1]

The Consumer Price Index rose by 0.4% last month compared to July, marginally ahead of consensus estimates. Core CPI was up 0.1%, which matched forecasts. The latest inflation reading pre-empts wider fears of a deflation scenario, easing any concerns that investors may have harboured. [2]

US markets were given a fillip by yesterday’s rises across commodity markets, with energy stocks leading the way. Alcoa gained a further 2.3% in early Wednesday trading, adding to its 8.1% jump on Tuesday.

At home, the UK’s leading FTSE 100 was continuing to add to recent gains, rising by 86.45 points (+1.71%) to 5128.58 at 4pm. The more representative FSTE 250 Index was also surging higher during midweek afternoon trading, adding 123.90 points (+1.35%) to 9288.14.

In Europe, the French CAC 40 had pushed 1.70% higher to 3815.93, while in Germany the Dax was up by 1.37% to 5706.34.

The blue-chip index has been pushed higher today by energy and resource stocks, with Tullow Oil up by 78p, or 7.2% to 1165p, and Eurasian Natural Resources climbing 48p (+5.6%) to 909p shortly before 4pm. Also in the top five were London Stock Exchange (+8.5%), and Next after the retailer unveiled a 6.9% jump in pre-tax half-year numbers to £185.5 million this morning.

Looking ahead to tomorrow morning, August’s retail sales data takes the spotlight at home, along with the CBI’s monthly industrial trends survey. Following on from Next’s half-yearly results on Wednesday, further evidence of how the high street is coping with the economic downturn comes from clothing retailer French Connection, and DIY chain Kingfisher.

[1] Source: Financial Times website (16 September 2009)
[2] Source: Financial Times website (16 September 2009)

By Anthony Grech, Research Analyst, IG Index.

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