Markets Surge Despite Inflation Data Strengthening Fed Rate Hike Case

The global markets experienced a surge on Friday, despite the release of US inflation data that increased the likelihood of a Federal Reserve interest rate hike next week.

The FTSE 100 index rose 41.52 points, or 0.4%, to close at 10,650.44, while the AIM all-share gained 2.92 points, also 0.4%, to reach 790.87.

European markets followed suit, with the CAC 40 in Paris and DAX 40 in Frankfurt each climbing 0.8% on the day.

The US inflation report showed a year-on-year increase of 3.4% in August, matching both July's pace and market expectations cited by FXStreet.

Analysts at Barclays stated that 'although some of the August strength seems one-off, we think the data are supportive of a rate hike next week,' maintaining their call for a 25 basis point hike at the September meeting.