Sector movers: Risk assets rally hard after softer than expected US CPI print

(Sharecast News) - Risk assets rallied hard on the back of a softer-than-expected reading for US consumer prices covering the month of October. London's top-flight index was only 1.04% higher to 7,372.05, but that belied a 2.76% surge for cable to 1.1671. A truer measure was the second-tier index, which put on 3.86% to 19,369.16.

Gilts also caught a bid, as investors moderated their bets for policy tightening by the US Federal Reserve on the back of the report.

As of 1613 GMT, the yield on the benchmark 10-year Gilt was off by 16 basis points to 3.407%.

In parallel, Fed funds futures had basically priced out the chances of a hike in the target range for official short-term interest rates to 5.0-5.25% by July 2023 and even 4.75-5.0% was now questionable - albeit by a razor-thin margin.

As an aside, two days before, the head of the Richmond Fed, Thomas Barkin, had cautioned that the data might be choppy over coming months.

Some economists at the International Monetary Fund had predicted as much as regarded US shelter costs - the largest component in CPI (at least until January's methodological rejig) in the US as far back as last July.

Metals prices were higher in the background, with December copper on COMEX trading up by 2.28% to $3.7845 a pound. Similarly-dated gold futures were rising by 2.25% to $1,752.20/oz.

Following the release of the latest US inflation data, Ian Shepherdson, chief economist at Pantheon Macroeconomics, told clients: "We have learned over the past 18 months or so that one good core CPI print proves nothing, but we see good reasons to think this one is the real deal, given the downward pressure in the pipeline.

"[...] For what it's worth, we think any further rate hikes are a mistake, and we see little chance that the terminal rate will be as high as 5%."

Top performing sectors so far today

Leisure Goods 17,509.10 +6.77%

Real Estate Investment Trusts 2,420.27 +6.64%

Industrial Transportation 3,741.92 +6.06%

Household Goods & Home Construction 10,419.82 +5.98%

Automobiles & Parts 1,478.52 +5.91%

Bottom performing sectors so far today

Aerospace and Defence 4,705.67 -3.10%

Tobacco 35,894.61 -2.71%

Oil, Gas and Coal 8,138.48 -2.29%

Personal Care, Drug and Grocery Stores 4,040.80 -0.24%

Alternative Energy 0.00 0.00%