US open: Stocks mostly lower on interest rate speculation

Wall Street stocks were mostly in the red after a better-than-expected increase in core US inflation fuelled speculation about an interest rate hike.

Excluding energy and food, core inflation rose 0.3% month-on-month in April, ahead of the previous month and estimates of 0.2%, respectively, the Bureau of Labor Statistics revealed.

Including food and energy, which declined further, the US consumer price index (CPI) rose 0.1% month-on-month in April, easing back from a 0.2% in March, as forecast by analysts.

Compared to a year ago the US fell further into deflation, down 0.2% year-on-year in April, as expected, following a 0.1% drop in March.

The dollar rose against the euro and the pound following the report.

"The 0.3% month-on-month increase in core consumer prices in April, which pushed the three-month annualised rate of core inflation up to a four-year high of 2.6%, leaves the Fed with less scope to delay raising interest rates," Capital Economics said.

"Admittedly, the annual core inflation rate remained at 1.8%, but the upward trend in the monthly increases since January is pretty clear now."

The Federal Reserve is looking for signs that inflation is picking up towards its 2% target as they determine the timing of the first interest rate hike since June 2006.

Fed Chair Janet Yellen will speak in Providence, Rhode Island at 18:00 BST, potentially shedding further light on the central bank’s next move.

Company-wise, JP Morgan Chase & Co. snapped an earlier rise after the bank defeated claims that it mismanaged trust accounts established for an Indianapolis church endowed by the descendants of drug company founder Eli Lilly.

Deere & Company gained as the agricultural company reported second-quarter earnings that exceeded analysts’ expectations.

Oil slid, with West Texas Intermediate down 1.3% to $59.94 per barrel and Brent crude down 1.49% to $65.56 at 15:22 BST, as traders waited for US oil drilling data.