Stocks stumble as caution reigns ahead of U.S. inflation data
Send a link to a friend
[August 09, 2022] By
LONDON (Reuters) - Shares slipped and the
dollar hung off recent highs on Tuesday as investors eyed U.S. inflation
data due a day later that will likely yield clues to any further
aggressive Federal Reserve rate hikes.
The stakes are high for the July U.S. consumer prices report on
Wednesday after an unexpectedly strong U.S. jobs data last week boosted
expectations of a sharp interest rate increase to tackle soaring
The broader Euro STOXX 600 fell 0.6%, after logging its best session in
nearly two weeks on Monday, with German stocks down 0.7%. Miners and
autos, among top gainers a day earlier, led declines on Tuesday.
Wall Street futures pointed to slim gains.
"The focus is on tomorrow's U.S. inflation numbers and whether or not
they are likely to show any indication of a softening of inflationary
pressures," said Michael Hewson, chief market analyst at CMC Markets.
"Are we near the peak, and will tomorrow's CPI numbers reflect that?"
On Monday, Wall Street closed mostly flat after blockbuster jobs data
last week reinforced expectations the Federal Reserve will crack down on
inflation, while a revenue warning from chipmaker Nvidia reminded
investors of a slowing U.S. economy.
Investors are now awaiting the consumer price data to gauge whether the
Fed might ease slightly in its inflation fight and provide a better
footing for the economy to grow.
The dollar also held just below its recent top, with traders wary of a
surprise that could heap more upward pressure on interest rates. Against
a basket of currencies, the dollar was down a fraction at 106.14.
The MSCI world equity index, which tracks shares in 47 countries, fell
Earlier, MSCI's broadest index of Asia-Pacific shares outside Japan was
flat, after giving up modest gains. Japan's Nikkei slid 0.95%, hit by
weak quarterly earnings by corporate heavyweights and lowered
expectations for the video game market.
Caution abounded in bond markets, too, with euro zone bond yields
steady. Germany's 10-year yield, the benchmark for the bloc, was
unchanged at 0.90%.
[to top of second column]
An investor looks at an electronic board showing stock information
at a brokerage house in Beijing, China, August 25, 2015. China's
major stock indexes sank more than 6 percent in early trade on
Tuesday, after a catastrophic Monday that saw Chinese exchanges
suffer their biggest losses since the global financial crisis,
destabilising financial markets around the world. REUTERS/Kim Kyung-Hoon
There were some encouraging signs for the Fed on the prices front, with a New
York Fed survey on Monday showing consumers' inflation expectations fell sharply
"That'll be music to the Fedís ears, since if that trend continues then it means
that the Fed may not have to be so aggressive in hiking rates," Deutsche Bank
"One of their big fears is that higher inflation expectations will lead to a
self-fulfilling prophecy of higher actual inflation."
Soaring prices across the globe are likely to be top of the agenda at the
Jackson Hole central banking symposium later this month.
The Bank of England (BoE) will probably have to raise interest rates further
from their current 14-year high to tackle inflation pressures that are gaining a
foothold in Britain's economy, BoE Deputy Governor Dave Ramsden said.
Sterling was up 0.4% versus the dollar at $1.2128. It is down more than 10% this
year versus the greenback.
Brent crude reversed earlier losses to rise $1 a barrel to $97.41 after reports
Russia had suspended oil exports via the southern leg of the Druzhba pipeline.
Oil prices had earlier continued their recent retreat after suffering their
biggest weekly drop since April 2020 on worries about stalling global demand as
central banks tighten policy. [O/R]
(Reporting by Tom Wilson in London Additional reporting by Julie Zhu in Hong
Kong; Editing by Jan Harvey and Mark Potter)
[© 2022 Thomson Reuters. All rights
reserved.]This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.