Stocks struggle as U.K. inflation fuels hawkish bets

Stocks struggled for direction as still-rampant consumer price pressures in Britain proved a cautionary tale for global central banks fighting inflation and markets wagering they're close to the end of their tightening cycles.

Futures contracts on the S&P 500 fluctuated in a narrow range after the gauge notched its first back-to-back losses in nearly four weeks. Economic bellwether FedEx Corp. tumbled in extended U.S. trading after its outlook fell short of analyst consensus estimates on weakened demand. Traders ramped up bets for further Bank of England interest-rate hikes after another shock inflation reading, pricing the benchmark reaching a level not seen since the turn of the century a day before a policy meeting.  

The U.K. inflation setback could also justify a more hawkish tone by Federal Reserve Chair Jerome Powell, who is due to give his semi-annual report to Congress on Wednesday. Price pressures haven't yet succumbed to 12 consecutive BOE hikes, and may act as a clarion call for global central banks who are considering downshifting to easier policy, according to Pooja Kumra, senior European rates strategist at Toronto Dominion Bank. 

“The BOE is still not able to get a control on the underlying pressures,” said Pooja Kumra, senior European rates strategist at Toronto Dominion Bank. “A key risk for markets is whether Powell provides any conditions for the FOMC getting back to their hiking cycle after a pause in June.”