Global Stocks Are Struggling With Inflation And The Prospects For Growth.
The prospect for inflation and growth was in the limelight on Wednesday, and global stock markets delivered mixed results.
Asia sank after a slowing in US consumer inflation failed to dispel Covid fears, with Hong Kong being driven down by a collapse in casino stocks as Macau announced a planned crackdown on the industry.
In afternoon European dealings, shares in Frankfurt and Paris fell as well, however London rose despite data showing that UK annual inflation hit a nine-year high of 3.2 percent in August.
That happened just one day after data showed that US inflation fell to 5.3 percent in August, down from a 13-year high.
The Dow opened flat, but Wall Street was generally higher.
Concerns that central banks will stop Covid support efforts to manage inflation have caused markets to swing this year.
Policymakers stress that higher costs are just transitory, but investors are skeptical.
“With predictions for tapering and rate hikes, inflation is obviously becoming a big concern,” OANDA analyst Craig Erlam told AFP.
“While the current downturn in the US provides some respite, the Fed is still projected to taper this year, and more tightening is not far behind.”
Inflation fears, Erlam noted, might “serve as a headwind for equities markets in the latter months of the year.”
Following a strong start to September, most global markets have reverted in recent sessions as the Delta coronavirus type has shattered investor confidence.
A troubling increase in new cases has forced a number of countries, including China, to reimpose strong containment measures. These could result in a new economic downturn.
“In recent days, we’ve seen heightened symptoms of risk aversion across the financial markets, presumably due to concerns of a slowdown in economic growth and rising prices – or, in other words, stagflation,” according to ThinkMarkets analyst Fawad Razaqzada.
Investors must also contend with a slew of other challenges, including China’s regulatory crackdown on private companies, especially those in the high-tech industry.
Asian markets were under pressure, with lower-than-expected retail sales figures indicating that China’s economy slowed even further in August.
Losses were topped by Hong Kong, with Macau casino operators falling as the latest to be caught in China’s regulatory crosshairs.
Meanwhile, fears of a probable default by Chinese property behemoth Evergrande, whose debts total more than $300 billion, are causing widespread concern.
The FTSE 100 index rose by less than 0.1 percent to 7,037.56 points in London.
DAX 30 in Frankfurt is down less than 0.1 percent. Brief News from Washington Newsday.