The FTSE 100 is expected to open lower this morning, as new figures showed China’s producer prices rose at the fastest pace in more than two years last month.
The producer price index rose 1.7% from a year earlier, according to National Bureau of Statistics data, compared with the median forecast for a 1.5% rise from a Reuters poll of analysts.
Resurgent producer prices raises the prospect of China exporting inflation to the rest of the world as factories start hiking prices for goods sold abroad, Bloomberg reported.
The blue chip index yesterday finished up up 0.2% higher or 11.21 points, at 6730.34. CMC Markets traders today expected the FTSE 100 to open 42 points lower at 6688.
David Madden, market analyst at CMC Markets said: “Overnight, China’s PPI rate swung from 0.3% in January to 1.7% in February, its highest reading since November 2018. The surge in prices at the factory level adds weight to the argument that higher inflation is in the pipeline as increases in costs at the factory level are likely to be passed on to consumers.”
He added that he thought the jump in China PPI’s rate will accelerate the price/inflation fears story, “which will probably push up bond yields and therefore possibly hurt stocks”.
Yesterday the imminent prospect of President Joe Biden’s $1.9 trillion stimulus bill being signed into law boosted the Nasdaq. Shares in firms including Apple and Amazon made gains and investors looked to tech stocks.
Results due this morning include from Foxtons, the London estate agency chain which may stand to benefit from an extension to the stamp holiday and a new mortgage guarantee scheme announced by Chancellor Rishi Sunak last week.
The Restaurant Group, which is behind chains such as Wagamama and Frankie & Benny's, will update on 2020 figures.
