The UK equity market finished the week on a high as US data came in better than forecast and low Eurozone inflation fuelled stimulus hopes. The University of Michigan’s forward-looking consumer confidence index rose to 92.1 in October from 87.2 the previous month, smashing expectations for reading of 89.
According to another set of figures released by the Federal Reserve, industrial output fell 0.2% from an upwardly revised 0.1% decline in the previous month and compared with analysts’ expectations for a 0.3% decline.
The decline in industrial production in September was a much smaller fall than we were expecting, but it nonetheless illustrates the impact that the stronger dollar is having on manufacturing and the impact that the slump in energy prices is having on mining output.
Manufacturing output fell by a very modest 0.1% month-on-month last month and the decline in August was revised to 0.1% month-on-month from 0.4% month-on-month. Analysts had predicted a 0.2% fall.
Eurozone CPI
Eurostat’s final estimate of the Eurozone consumer price index confirmed a 0.1% year-on-year fall in September, down from August’s 0.1% rise, as energy prices continued to drag. The figures were as expected by analysts.
With the Eurozone-wide figure expected at -0.1%, the region’s indices could see a return of the market-lifting hopes that always seem to creep in whenever any data suggests that Mario Draghi might need to dip into his ECB QE coffers for a bit of extra stimulus.
ECB policymaker Ewald Nowotny on Thursday said fresh measures were needed to lift inflation towards the monetary authority’s target of just below 2%. The weak inflation figures come despite the ECB’s €60m a month asset purchase programme which is due to run until at least September 2016. However, the ECB has indicated that it will consider extending the programme if the outlook for inflation worsens.
Gold is up $24 on the week, at one point it reached $1,190 an ounce, its highest level since June before settling at $1,181 and ounce. Brent oil ended the week down 5.2% at $49.89, this follows a 9% rise over the previous 5 days.