LONDON: US and European stock markets mostly fell Tuesday on the eve of key US inflation data and amid lingering concerns about weakness in China’s economy.
On Wall Street, the Dow was flat in late morning trading, while both the S&P 500 and tech-heavy Nasdaq were down.
In Europe, Paris and Frankfurt closed lower, but London’s FTSE 100 ended the day with a small gain.
Among individual stocks, investors will monitor the expected unveiling of Apple’s latest iPhones and other products from the world’s most valuable company.
“With the US dollar also rebounding across the board, things could start to turn more volatile for equities again, especially if Apple fails to wow investors,” said Fawad Razaqzada, market analyst at City Index and Forex.com.
But attention is already geared towards Wednesday’s update on consumer prices in the world’s biggest economy.
European stock markets climb at open
A reading that points to inflation remaining hot could prompt the Federal Reserve to continue to hike US interest rates this year, confounding analyst expectations of a freeze.
Investors fear that the rising borrowing costs will tip the US economy into recession.
While the Fed meets next week, the European Central Bank will decide Thursday whether to pause or continue its own rate-hike campaign after 10 straight increases.
Oil prices rose on supply concerns.
“Floods in Libya have led to oil supply disruptions with its price surging to 10-month highs amid expectations of another US crude inventory drop,” said Axel Rudolph, senior market analyst at online trading platform IG.
Higher oil prices increased concerns about inflation staying above target for longer.
“A higher oil price is a worry, given how the talk this summer has been about easing inflationary pressures,” noted Russ Mould, investment director at AJ Bell.
“Higher energy costs could derail that trend and cause new problems for consumers and businesses. However, investors don’t appear to recognise that risk given trends seen on global markets in recent sessions.”
A group of leading economists at some of the world’s biggest banks said they did not expect the Fed to hike again in 2023 and would begin slashing borrowing costs in the new year, while they also predicted the United States would avoid a recession.
“Given both demonstrated and anticipated progress on inflation, the majority of the committee members believe the Fed’s tightening cycle has run its course,” said Simona Mocuta, chair of the 14-member American Bankers Association’s Economic Advisory Committee.
The ABA includes economists from banking titans such as JPMorgan Chase, Morgan Stanley and Wells Fargo.
In Asia, the Hong Kong stock exchange fell but property stocks rallied following a report that troubled Chinese developer Country Garden had been given the green light by creditors to extend payments on six yuan bonds by three years.
The firm won approval from creditors this month to extend a deadline for another key bond repayment to give it time to recover financially.
The latest report helped soothe concerns about China’s troubled property sector, pushing the firm’s shares up around two percent.
Rival China Evergrande, which is also struggling with massive debts, climbed more than six percent.
Country Garden said last week it had made multimillion-dollar interest payments on two outstanding loans, narrowly avoiding what would have been its first default.
However, China worries continue to dampen buying sentiment, even after small signs of improvement in the world’s number-two economy, including a return to inflation and smaller-than-expected drop in exports and imports.
Key figures around 1530 GMT
New York - Dow: FLAT at 34,670.67 points
London - FTSE 100: UP 0.4 percent at 7,527.53 (close)
Frankfurt - DAX: DOWN 0.5 percent at 15,715.53 (close)
Paris - CAC 40: DOWN 0.4 percent at 7,252.88 (close)
EURO STOXX 50: DOWN 0.3 percent at 4,2242.27 (close)
Tokyo - Nikkei 225: UP 1.0 percent at 32,776.37 (close)
Hong Kong - Hang Seng Index: DOWN 0.2 percent at 18,025.89 (close)
Shanghai - Composite: DOWN 0.2 percent at 3,137.06 (close)
Dollar/yen: UP at 147.12 yen from 146.56 yen on Monday
Euro/dollar: DOWN at $1.0730 from $1.0752
Pound/dollar: DOWN at $1.2481 from $1.2511
Euro/pound: UP at 85.99 from 85.87 pence
Brent North Sea crude: UP 1.8 percent at $92.30 per barrel
West Texas Intermediate: UP 2.3 percent at $89.25 per barrel
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