Global stocks, Wall Street futures lower amid inflation pressure

Global stocks and Wall Street futures fell on Friday after higher-than-expected US inflation dashed hopes the Federal Reserve might back off plans for more interest rate hikes.

London and Frankfurt opened lower. Shanghai, Tokyo and Hong Kong retreated. Oil prices declined.

Wall Street’s benchmark S and P 500 index lost 1.1 per cent on Thursday, adding to declines after August inflation stayed near a four-decade high despite four interest rate hikes this year to slow the economy.

On Thursday, US government data showed unemployment claims last week declined while August consumer sales rose. That gives ammunition to Federal Reserve officials who say the economy can tolerate more rate hikes.

Wall Street’s decline indicates no sign of relief for risk sentiments while the job market data provided the go-ahead for further tightening in monetary policy, Yeap Jun Rong of IG said in a report.

In early trading, the FTSE 100 in London lost 0.3 per cent to 7,262.67 and the DAX in Frankfurt shed 1.7 per cent to 12,731.46. The CAC 40 in Paris sank 1.4 per cent to 6,070.61.

On Wall Street, the S and P 500 future was down 0.9 per cent. That for the Dow Jones Industrial Average was off 0.8 per cent.

The S and P 500 sank on Thursday after the Labour Department said applications for unemployment benefits last week fell to a four-month low.

The market benchmark is down 4.1 per cent for the week following the biggest pullback in two years on Tuesday after the government reported US consumer prices rose 8.3 per cent from a year earlier and 0.1 per cent compared with July.

The overall figure was down from June’s 9.1 per cent peak. But core inflation, which strips out volatile food and energy prices to give a clearer picture of the trend, rose to 0.6 per cent over the previous month, up from July’s 0.3 per cent increase.

Traders worry rate hikes by the Federal Reserve and central banks in Europe and Asia to control price rises might derail global economic growth. Two of the Fed’s rate hikes this year have been by 0.75 percentage points, triple its usual margin. Traders expect a similar increase this month.

Fed chair Jerome Powell said in August that rates would stay elevated for some time until the US central bank is sure inflation is under control.

The Dow fell 0.6 per cent and the Nasdaq slid 1.4 per cent.

In Asia, the Shanghai Composite index lost 2.3 per cent to 3,126.39 after data showed Chinese consumer and factory activity improved in August but were still weak.

Housing sales fell 30 per cent from a year earlier under pressure from a government crackdown on debt.

The Nikkei 225 in Tokyo sank 1.1 per cent to 27,567.65 and the Hang Seng in Hong Kong retreated 0.9 per cent to 18,761.69.

The Kospi in Seoul shed 0.8 per cent to 2,382.78 and Sydney’s S and P-ASX 200 was 1.5 per cent lower at 6,739.10.

India’s Sensex retreated 1.7 per cent to 58,897.88. New Zealand and Southeast Asian markets declined.

Retail sales data gave a mixed view of how American consumers are coping with inflation. Sales rose by an unexpectedly strong 0.3 per cent in August after falling 0.4 per cent in July.

Railroad operators mostly edged higher on Thursday after a tentative labour agreement was reached, averting a disruptive strike.

In energy markets, benchmark US crude lost 46 cents to USD 84.64 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell USD 3.38 on Thursday to USD 85.10.

Brent crude, the price basis for international oil trading, sank 33 cents to USD 90.51 per barrel in London. It lost USD 3.26 the previous session to USD 90.84.

The dollar declined to 143.32 yen from Thursday’s 143.49 yen. The euro fell to 99.60 cents from 99.91 cents.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)