Thanks for joining me. Inflation rose to 4% in December, according to the latest figures from the Office for National Statistics.
Mortgage borrowers were watching the figure closely, as the Bank of England raised interest rates to their highest levels in 16 years in a bid to return Britain’s inflation rate to its 2% target.
5 things to start your day
1) Two of Britain’s biggest investment banks have joined forces amid a stock market slowdown in London | Racehorse magnate and former Barclays boss Rich Ritchie is leading the City deal
2) Why does the Red Sea crisis signal a new era for interest rates? | As instability becomes the new normal, money managers are preparing for another long war
3) George Osborne says the Conservatives must prioritize the economy over the immigration bill to win votes | Rishi Sunak must “double down” on his economic message, says the former chancellor
4) JEREMY WARNER: The Conservatives, addicted to cheap money, have wasted 14 years in power | The party has only itself to blame as it seems to be heading towards certain defeat
5) Ambrose Evans-Pritchard: The West protects China’s vital interests in the Red Sea | Xi Jinping is free riding on the British and US navies’ defense of global trade
What happened overnight
Asian stocks fell sharply after a series of data pointed to an incomplete recovery in China, while the dollar approached the highest level in a month as traders backed away from their bets on early interest rate cuts.
Official figures showed on Wednesday that the Chinese economy grew last year at one of its slowest rates in more than three decades, as it was exposed to a stifling real estate crisis, a slowdown in consumption, and global unrest.
Those numbers have already surpassed Beijing’s target but will still pile new pressure on officials to unveil more stimulus measures to jump-start business and get the country’s army of consumers spending again.
China’s National Bureau of Statistics revealed that GDP expanded by 5.0% to 126 trillion yuan (£14 trillion) last year.
Japanese stocks closed lower, with the benchmark Nikkei 225 index falling 0.4%, or 141.43 points, to 35,477.75 points, while the broader Topix index lost 0.3%, or 7.60 points, to 2,496.38 points.
Australia’s S&P/ASX 200 index fell 0.3% to 7,393.10 points. South Korea’s Kospi index fell 2% to 2,447.09. Hong Kong’s Hang Seng Index fell nearly 3.1% to 15,381.84. The Shanghai Composite Index fell 0.9% to 2,868.96.
Wall Street fell on Tuesday in a disappointing return to trading after a three-day weekend in America.
The S&P 500 fell 0.4%, closing at 4,765.98. Meanwhile, the Dow Jones Industrial Average of 30 leading US companies fell 0.6% to 37,361.12 points. The Nasdaq Composite Index, which is heavily skewed toward technology stocks, fell 0.2%, closing at 14,944.35.
Yields rose in the bond market after Christopher Waller, a US Federal Reserve official, said in a speech that “policy is set right” on interest rates. After the speech, traders placed some bets that the Fed’s first interest rate cut would be made in May rather than March.
The yield on the 10-year Treasury note rose to 4.06% from 3.95% late Friday.