By James langton
(May 16 – 09:00 ET) – The U.S. Consumer Price Index came in unchanged this morning, with the core rate (ex food and energy) up 0.2%. Economists expected a 0.1% rise on the headline and 0.2% on the core, so the release was more or less on consensus.
U.S. housing starts came in up 2.8% for April. A very strong number, and ahead of expectations.
Statistics Canada is reporting that manufacturers’ shipments rebounded strongly in March, increasing 3.8% to $44.9 billion, following a February decline. The increase was widespread, but was focused in the automotive, electrical and electronic products, and refined petroleum and coal industries.
Usually the U.S. CPI would be a critical market mover. But with the Federal Open Market Committee meeting this afternoon, and expected to announce a 50 basis point rate hike at about 14:15 ET, the CPI isn’t that important to traders.
Ahead of the rate decision markets are pricing in an 83% chance of a 50 bps movement, and stocks are surging ahead regardless. London’s FTSE is up 72 points to 6319. France’s CAC 40 has gained 107 points to 6499. In Germany the DAX is up 146 points to 7341.
The rumoured blockbuster Internet deal is going ahead, with Terra Networks SA buying Lycos Inc. for almost US$12 billion in stock. QXL.com PLC, Internet auctioneer, is buying German rival Ricardo.de AG for US$1 billion in stock.
Bloomberg is reporting that Prince Alwaleed Bin Talal, a nephew of Saudi Arabia’s King Fahd, spent US$1 billion buying stock in 15 U.S. companies, including Amazon.com, WorldCom Inc., Coca-Cola Co., Pepsi Co. and AT&T Corp.
Overnight in Asia stocks rallied ahead of the U.S. rate decision. The Nikkei closed up 238 points to 17551. The Hang Seng rose 279 points to 15160.