Daily Times

US and European stocks failed to capitalize on optimism that US inflation may be finally peaking after soaring to its highest level in decades.

US consumer prices rose seven percent on year in December, the fastest rate since 1982, as supply snarls and energy costs were compounded by surging demand from Americans returning to normal life.

However, Wednesday’s highly anticipated reading was in line with expectations and analysts pointed out that the increase from the previous month had slowed and was below forecasts. There was a similar trend in the producer price index (PPI) released on Thursday. Despite registering the largest calendar-year increase in a decade at 9.7 percent for 2021, producer prices rose just 0.2 percent in December monthly.

The data “brought forward the idea that this could be the point we see a peak in the inflation levels and light at the end of the long and dark inflation tunnel,” said Ipek Ozkardeskaya, senior analyst at Swissquote.

While European stocks mostly pushed into the green after the data and Wall Street opened higher, they later fell back. In late morning trading on Wall Street, only the Dow was higher, climbing 0.5 percent. In Europe, London rose 0.2 percent and Frankfurt added 0.1 percent, but Paris gave up 0.5 percent. Interest rates and inflation “will keep investors on their toes”, said market analyst Craig Erlam, who added that “underlying anxiety in the markets… could make for some volatile price action for the foreseeable future”.