Mortgage holders have been dealt a blow after underlying inflation increased last month, putting pressure on the Bank of England to continue raising interest rates.
The consumer prices index was flat at 8.7pc in May but the all-important core inflation figure watched by policymakers came in at 7.1pc – ahead of market expectations.
5 things to start your day
1) Downing Street dismisses Gove’s call for long-term mortgage deals | Government says that it is up to lenders to decide on products amid rising interest rates
2) Why a 25-year fix is not a silver bullet for the mortgage crisis | Gove’s proposal would likely lead to higher costs and require fundamental market reform
3) Mortgage bailout demands prove Covid left us addicted to welfare | Panic-stricken calls to raid the state’s coffers ignore Britain’s real crisis
4) Starmer must drop support for flagship £20bn nuclear power station, says former Gordon Brown adviser | Nick Butler urged the Labour leader to instead back the use of British-designed nuclear tech
5) ‘New Concorde’ edges closer to first flight after round of deals | Boom jets could cut journey times between London and New York to under four hours
What happened overnight
Asian stocks struggled on Wednesday as a lack of new stimulus steps from Beijing frustrated investors, who were also wondering just how hawkish the world’s most powerful central banker would be later in the session.
Federal Reserve chairman Jerome Powell is scheduled to give his semi-annual report to Congress later in two days of testimony and is sure to be questioned on whether rates will really rise again in July and peak in a 5.5pc to 5.75pc range as projected.
MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.8pc, with South Korea off 0.6pc.
Japan’s Nikkei added 0.7pc as the market consolidates three months of hefty gains. A survey showed morale at big Japanese manufacturers firmed in June to stay in positive territory for a second straight month.
Chinese blue chip stocks eased 0.6pc with investors still disappointed by the extent of Tuesday’s rate cuts, which also saw the yuan hit its lowest for the year.
Wall Street stocks retreated Tuesday in their first day of trading after a US public holiday.
All three major US equity indexes ended the session in the red amid signs of weakening global demand.
The Dow Jones Industrial Average shed 0.7pc to 34,054.07. The broad-based S&P 500 dipped 0.5pc to 4,388.73, while the tech-rich Nasdaq Composite Index lost 0.2pc at 13,667.29.
