LONDON: Major European and Asian stock markets mostly fell for a second session running Tuesday as traders booked profits before updates on the US economy this week, notably a key inflation reading.
World stock markets, including in New York, made solid gains in recent weeks on hopes that that the Federal Reserve had finished with hiking rates – and that the US central bank could cut borrowing costs next year as inflation cools.
Looking ahead to the US open, “Wall Street futures are suggesting a slightly softer start will be seen for Tuesday’s trade as investors take stock of what has been another strong month of gains”, said Joshua Mahony, chief market analyst at Scope Markets.
“Yesterday’s miss in reported new home sales for October underlines the fact that rising borrowing costs are taking a toll on the consumer end of the market.”
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A string of recent US indicators pointing to a slowing economy – as well as a below-forecast rise in consumer prices – have fuelled optimism that the Fed will stop hiking.
Investors will Thursday pore over the closely-watched personal consumption expenditures (PCE) price index, the Fed’s preferred guide on inflation.
They will be keeping an eye also on several other US pointers this week, including consumer confidence and gross domestic product.
Additionally, a number of Fed officials were lined up to talk, including boss Jerome Powell, though they are expected to stick to their long-running line that policy decisions will be based on data, and that they see rates staying higher for longer to tame inflation completely.
“The market appears to have embraced the idea that slowing economic data will hasten the arrival of market-friendly rate cuts, even though the Fed has continued to telegraph otherwise,” said Chris Larkin at E*Trade from Morgan Stanley.
“This week will provide plenty of opportunities for traders to decide whether that cooling trend is intact.”
Expectations that rates will come down have weighed on the dollar in recent weeks, although the greenback was steadier Tuesday.
Elsewhere, oil prices climbed more than one percent as OPEC and its key allies gear up for a delayed meeting due Thursday.
Last week’s gathering was postponed after some African countries reportedly baulked at more production cuts proposed by Saudi Arabia.
The Saudis and Russia are thought to be considering announcing a further reduction in output into the new year as they try to prop up prices, which have come down over recent months owing to slowing economies and softening demand.
Key figures around 1100 GMT
London - FTSE 100: DOWN 0.4 percent at 7,431.57 points
Paris - CAC 40: DOWN 0.5 percent at 7,229.38
Frankfurt - DAX: DOWN 0.1 percent at 15,955.53
EURO STOXX 50: DOWN 0.4 percent at 4,339.09
Tokyo - Nikkei 225: DOWN 0.1 percent at 33,408.39 (close)
Hong Kong - Hang Seng Index: DOWN 1.0 percent at 17,354.14 (close)
Shanghai - Composite: UP 0.2 percent at 3,038.55 (close)
New York - Dow: DOWN 0.2 percent at 35,333.47 (close)
Euro/dollar: DOWN at $1.0954 from $1.0958 on Monday
Pound/dollar: UP at $1.2635 from $1.2627
Euro/pound: DOWN at 86.69 pence from 86.75 pence
Dollar/yen: DOWN at 148.60 from 148.64 yen
West Texas Intermediate: UP 1.2 percent at $75.73 per barrel
Brent North Sea crude: UP 1.1 percent at $80.82 per barrel
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