US inflation and China stimulus news boosts markets, investors await US non-farm payroll data and Direct Line dented

“After what proved to be a difficult August, a key measure of US inflation came in roughly in line with forecasts overnight to help markets get September off to a steady start,” says AJ Bell Investment Director Russ Mould.

“What supported the FTSE 100 in particular was news of more Chinese stimulus, which helped break a losing streak for China’s mainland indices and lifted UK-listed stocks with exposure to the world’s second largest economy – most notably the miners.

“The key US non-farm payrolls number is out later – the earliest release based on hard data to offer a barometer of the American economy. The market will be hoping for signs that tightness in the labour market is easing, underpinning hopes the Federal Reserve will hit pause on rate hikes at its next meeting later this month.

“UK house price data from Nationwide was predictably gloomy. While the supportive supply and demand dynamics in the UK have spared the property market from complete collapse, the rapid increase in borrowing costs has started to shake its foundations.

“Estate agents, housebuilders and anyone with a mortgage will be praying the Bank of England gives signs it is close to the end point of rate increases when it meets on 21 September.

Direct Line

“The greater damage to Direct Line from the £30 million cost to cover over-charging customers for insurance products is to its brand and reputation – even if the financial cost will sting too.

“It compounds a really tough period for the company – inflationary pressures on claims have helped undermine its credentials as a reliable income stock.”

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