FTSE 100 Live July 20: Inflation at 9.4% adds pressure on Bank of England, Netflix stocks rebound

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Inflation hits 9.4%, a peak of 12% in October

One of the biggest factors in today’s inflation rate of 9.4% came from a stronger-than-expected rise in food price inflation, from 8.5% in May to a 13-year high of 9.8%.

Core inflation, which excludes food, energy, alcohol and tobacco, was weaker than expected after falling to 5.8% rather than hitting the 6% forecast.

Paul Dales, UK chief economist at Capital Economics, said: “There are some encouraging signs that the upward pressure on underlying inflation from global factors has started to ease.”

“But as it is being replaced by more upward pressure from domestic factors and CPI inflation is still likely to rise to 12% in October from 9.4% in June, we still believe the Bank of England will cut interest rates from June 1st .25% to 3%. even when the economy is in recession.”

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FTSE 100 higher, Royal Mail down 5%

The FTSE 100 index is 38.81 points higher at 7,335.09, reflecting speculation that Russia will resume gas exports to Europe via Nord Stream 1.

The pipeline, which carries more than a third of Russia’s gas exports to the EU, has been closed for maintenance since July 11.

Operations are expected to resume on Thursday, but at reduced capacity, assuaging initial fears it would remain offline for longer, which has hurt Europe’s hopes of avoiding a recession.

Among the big gainers in the FTSE 100 was BP, which rose 2% or 7.6p to 393.2p.

The FTSE 250 index rose 82.36 points to 19,364.95, despite mounting pressure on Royal Mail after yesterday’s vote on the strike.

Shares fell 5% to 271.2p today after a trading update revealed a £92m operating loss for the UK-focused postal and parcel delivery business for the first quarter.

The company plans to change the name of its holding company to International Distributions Services to reflect the importance of the international arm GLS to the group.

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Wall Street rallies, Netflix upbeat

Stronger-than-expected earnings and a weaker dollar lifted sentiment on Wall Street yesterday as the Dow Jones Industrial Average rose 2.5% and the Nasdaq rose 3%.

New York futures markets are also pointing to a stronger start later after Netflix shares rose 8% in extended trading last night following second-quarter results.

The streaming service reported losing 970,000 subscribers for the quarter, but that was better than the 2 million it forecast when shares plummeted in April.

Despite the improvement, Hargreaves Lansdown told Sophie Lund-Yates that rising costs are a big problem after spending on technology and development rose by a third.

She added, “Netflix is ​​still the largest streaming platform, which is reflected in the number of subscribers and the fact that subscriptions are expected to start growing again in the next quarter.

“Being tall makes you stickier and harder to leave. The concern has been whether this giant is losing its edge, meaning the benefits of size are beginning to wane.”

The next big milestone in the US earnings season will be Tesla after the closing bell tonight, followed by Twitter on Friday.

Alongside encouragement from recent gains, Wall Street’s performance reflects hopes that the Federal Reserve will hike interest rates by 75 basis points, rather than the 1 percentage point that was last week’s estimate.

As a result, the dollar has fallen after recently hitting a two-decade high against a basket of six major currencies.

Sterling held its position above $1.20 after last night’s Mansion House dinner, when Bank of England Governor Andrew Bailey said a 0.5% rate hike was one of the options for policymakers at their meeting in the next month.

CMC Markets expects the FTSE 100 index to open 34 points higher at 7330.