In London, the FTSE 100 is higher as the market started out strong, but the impressive inflation figures, spurred on sterling, and eroded the some of the early gains of the equity market.

Traders are hoping the Conservatives can come to an arrangement with the Democratic Unionist Party (DUP), and the two parties meet today. The Tories would like to form a minority government with the supply and confidence of the Northern Irish party. Since the DUP are fiscally and socially conservative, dealers are optimistic that a deal can be struck between the two sides. Investors will want to see stability return to British politics before fresh buying commences.  

The DAX was nudged lower after the German ZEW economic sentiment report for June fell to 18.6, from 20.6 in May, traders were anticipating a reading of 21.6.

Capita shares are up 14% after the company stated that its performance is in line with expectations. The firm was dogged by profits warnings last year, but after making some structural changes the company appears to be turning a corner. 

The pound jumped versus the US dollar and the euro after the UK announced very strong inflation figures for May. The headline CPI number came in at 2.9%, up from 2.7% in April, and above the estimate of 2.7%. While, the core CPI figure was 2.6%, and the consensus was 2.3%, it also rose from 2.4% in April. The rising cost of living in the UK is something the Bank of England (BoE) can’t ignore, and they are due to meet on Thursday. 

In the US, we are expecting the Dow Jones to open 27 points higher at 21,262 and the S&P 500 to open at 2433, up 4 points. At 11am, the US will reveal the National Federation of Independent Business (NFIB) small business index report, the consensus is for a reading of 105.2 in May, and that compares with 104.5 for April. The US will reveal May’s PPI and core PPI numbers at 1.30pm, and traders are anticipating 0.0% and 0.2% respectively.

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