STOCK markets were mixed yesterday after much-anticipated data showed US consumer inflation had eased only slightly in April.

Annual consumer inflation rose 4.9% last month, just a touch lower from 5.0% in March, official figures showed, despite the Federal Reserve’s strong efforts to rein in price increases.

While the latest number is a step in the right direction and marks the smallest annual rise in around two years, it remains well above pre-pandemic levels.

“Holding relatively firm at 4.9%, inflation is persisting despite the Fed’s long-running campaign of rate hikes,” said Srijan Katyal, global head of strategy and trading services at brokerage ADSS.

Following the Fed’s interest rate increase last week and a forecast-beating jobs report for the world’s biggest economy, cautious investors were waiting for the key US indicator for insights into policymakers’ forthcoming decision.

The improved data “should at least spur the Fed to entertain keeping its policy rate on hold when it meets again in June,” said Briefing.com analyst Patrick O’Hare.

While the Dow edged lower, both the S&P 500 and Nasdaq pushed higher.

The debt ceiling impasse is becoming more of a worry to investors, said FHN Financial’s Chris Low, noting that “the politics make compromise even more difficult to achieve.”

Earlier, Paris, London and Frankfurt all retreated. Major Asian indices also traded down yesterday.

Crunch talks

Adding to the Fed’s headache is the need to avoid causing more distress in the finance sector, after recent upheaval that saw three US regional lenders go under, one taken over by JPMorgan, and UBS buying Credit Suisse in the space of two months.

Dealers are also keeping tabs on developments in the talks to raise the US debt ceiling, with congressional leaders unable to reach an agreement on how to lift borrowing before a deadline risking catastrophic default.

Crunch talks between President Joe Biden and key lawmakers from both parties on Tuesday yielded no breakthrough, though they did decide to meet again on Friday.

However, the way forward will be tough because Republicans, who control the House of Representatives, said they would only raise the limit from its current US$31.4 trillion maximum if spending curbs were enacted.

Still, Jason Wong of the Bank of New Zealand said traders were biding their time for now.

“I don’t think there is likely to be any market reaction until we get closer to the X-date,” he said.

It remains unclear when the government will run out of funds, but the Treasury has warned it could happen as early as June 1.

Key figures around 2030 GMT

New York - Dow: DOWN 0.1% at 33,531.33 (close)

New York - S&P 500: UP 0.5% at 4,137.64 (close)

New York - Nasdaq: UP 1.0% at 12,306.44 (close)

London - FTSE 100: DOWN 0.3% at 7,741.33 (close)

Frankfurt - DAX: DOWN 0.4% at 15,896.23 (close)

Paris - CAC 40: DOWN 0.5% at 7,361.20 (close)

EURO STOXX 50: DOWN 0.4% at 4,306.76 (close)

Tokyo - Nikkei 225: DOWN 0.4% at 29,122.18 (close)

Hong Kong - Hang Seng Index: DOWN 0.5% at 19,762.20 (close)

Shanghai - Composite: DOWN 1.2% at 3,319.15 (close)

Euro/dollar: UP at US$1.0985 from US$1.0962 on Tuesday

Pound/dollar: UP at US$1.2627 from US$1.2621 

Dollar/yen: DOWN at ¥134.34 from ¥135.23 

Euro/pound: UP at 86.98 pence from 86.86 pence

West Texas Intermediate: DOWN 1.6% at US$72.56 per barrel

Brent North Sea crude: DOWN 1.3% at US$76.41 per barrel – AFP, May 11, 2023.