Global stock markets at record high ahead of crunch US inflation report – business live

In the City, profits at Burberry have dropped by 40% as the luxury goods market continues to struggle.

Burberry’s profits fell to £383m in the 12 months to the end of March, down from £634m a year earlier.

Revenues fell 4%, while profit margins also shrank.

Burberry reports that men’s and women’s ready-to-wear clothes sales were below average, but outerwear – such as its Heritage raincoats – were strong, while there was a double-digit increase in sales of scarves.

Jonathan Akeroyd, Burberry’s CEO, says that “executing our plan against a backdrop of slowing luxury demand has been challenging”, adding:

While our FY24 financial results underperformed our original expectations, we have made good progress refocusing our brand image, evolving our product and strengthening distribution while delivering operational improvements.

Back in January, Burberry issued a profit warning after weak Christmas trading.

And looking ahead today, Burberry cautions that the first half of the current financial year is expected to “remain challenging”.

It reports that sales in the Americas fell 12% last year. Sales in mainland China fell by 19% in the last quarter, but were up 2% over the year.

Sarah Riding, retail & supply chain partner at law firm Gowling WLG, says the retail market in general is “under the kosh at the moment”, adding:

“While Burberry’s results highlight a significant global reduction in sales and the subsequent fragility of the luxury market at present, there are still plenty of opportunities for those that have the supply chain ingenuity and ability to deliver against specific customer requirements in this space.

“Burberry has a proven track where this dynamic is concerned, given its aptitude in splitting its offering to suit key demographics that span demand for more obvious Burberry-led branding applies, while providing more subtle focused designs within its other lines – for example Thomas Burberry – thus, helping meet the need for quality and less obvious brand association at the same time

Global stock markets have climbed to a new record high today, ahead of the US inflation data due at 1.30pm UK time.

The MSCI All Country World Index, which tracks equities around the globe, nudged up to a new peak this morning, having closed at a record high last night.

That suggests optimism that today’s inflation report will show that underlying US inflation moderated last month.

Last night, the US tech-focused Nasdaq index closed at a record high; it’s gained around 10% so far this year.

There was also another flurry of meme stock excitement yesterday, with Gamestop surging 60%.

The UK’s stock market has helped with this rally – with the FTSE 100 hitting a series of record highs in recent weeks. The Footsie is up 9% since the start of January.

Jim Reid of Deutsche Bank reports that the markets turned more upbeat yesterday, telling clients:

The S&P 500 (+0.48%) closing within two tenths of a percent of its all-time high on March 28. Tech stocks outperformed, with the Magnificent 7 (+1.01%) reaching a new all-time high, led by Tesla (+3.29%) and Nvidia (+1.06%). But the equity rally was broad-based, with the small-cap Russell 2000 up +1.14%.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Hopes that America’s economy will achieve a ‘soft landing’ will be tested today by the latest US inflation data.

Investors across the globe are poised for April’s US CPI report, hoping to see signs that inflationary pressures are easing. But there’s also anxiety that price pressures are sticky, making it harder for the US Federal Reserve to lower interest rates soon.

Economists predict the annual US inflation rate will dip to 3.4% for April, after jumping unexpectedly to 3.5% in March.

On a monthly basis, prices are expected to have risen by 0.3%, a slowdown on March’s 0.4%.

Yesterday, Fed chair Jerome Powell pointed out that inflation has been falling more slowly than expected, despite US interest rates being raised to their highest in over two decades.

Powell told a conference in Amsterdam:

“We did not expect this to be a smooth road. But these [inflation readings] were higher than I think anybody expected.

“What that has told us is that we’ll need to be patient and let restrictive policy do its work.”

Investors are keenly awaiting the inflation data to gain a clearer understanding of when and to what extent the Fed might adjust interest rates, explains Fawad Razaqzada, market analyst at City Index and FOREX.com.

Razaqzada adds:

Persistent inflation in the first quarter, coupled with hawkish sentiments expressed by Fed officials advocating for prolonged high interest rates, have bolstered the US dollar.

However, recent developments such as weaker-than-anticipated US non-farm payrolls and an increase in jobless claims have fuelled speculation that the Fed might initiate interest rate cuts as early as September.

Core inflation, a key measure of underlying price trends, is forecast to slow to 3.6% per year, down from 3.8%.

Yesterday, we learned that US producers raised the prices by 0.5% in April, a faster increase than expected – but Wall Street shrugged that off, seemingly hopeful that today’s Consumer Price Inflation report will show prices easing.

The dollar has dropped to a one-month low against the euro this morning, ahead of the CPI data.

The agenda

• 10am BST: Second estimate of eurozone GDP in Q1 2024

• 10am BST: European Commission to release its spring economic forecasts

• 1.30pm BST: US inflation report for April

• 1.30pm BST: US retail sales report for April

• 3pm BST: UK Treasury Committee questions former Federal Reserve chair Ben Bernanke about the Bank of England’s forecasting