Markets in the United States and Europe are trading in a tight range as a result of US inflation data.
Tuesday’s stock markets in the United States and Europe were stuck in a tight range as US inflation data indicated pricing pressures were modestly receding, alleviating concerns that recent increases could throw the economy off track.
On news that core consumer prices jumped 5.3 percent in August compared to the same month last year, barely below July’s 13-year high of 5.4 percent, US stock futures initially rose and the dollar slumped, perhaps supporting the US Federal Reserve’s conviction that price gains will be short-term.
“It appears like the Fed got inflation right,” said OANDA.com analyst Edward Moya.
“An inflation slowdown could be just what they need to justify their taper pause, implying they have a few more months to watch how the labor market rebound plays out.”
The increases in stock prices evaporated as traders absorbed the news, with the Dow dipping into the red by late morning.
Investors have been concerned about profit margins, according to Moya, as data suggests that corporations are not passing on price increases to consumers.
In Europe, London and Paris were both lower at the end of the day, while Frankfurt was somewhat higher.
In recent months, investors have been concerned that a spike in inflation could compel central banks to hastily withdraw assistance and hike interest rates, jeopardizing the economy’s recovery from the pandemic.
Sharp price increases, according to the Fed, are only temporary and do not necessitate a sudden shift in monetary policy.
Hong Kong and Shanghai plummeted in Asian trading on worries about struggling property colossus Evergrande, which is on the verge of bankruptcy and owes hundreds of billions of dollars.
The company has warned that it is under “extreme strain” due to a cash crunch that many fear would push it into bankruptcy and have a negative impact on the Chinese economy.
Evergrande’s Hong Kong-listed shares tumbled over 12%, and the company’s stock has lost nearly 80% of its value since the beginning of the year.
Tokyo, on the other hand, had its best year in 31 years, thanks to renewed prospects for Japanese stimulus.
Oil prices have risen sharply, despite the International Energy Agency reporting that global crude demand has fallen for three months in a row due to an increase in Covid cases in Asia.
However, oil demand is likely to pick up in October, according to the report.
Dow Jones Industrial Average: DOWN 0.5 percent to 34,706.42 points in New York.
The FTSE 100 index in London is down 0.5 percent at 7,034.06. (close)
DAX 30 in Frankfurt is up 0.1 percent at 15,722.99. (close)
CAC 40 in Paris is down 0.4 percent at 6,652.97. (close)
STOXX EURO 50: FLAT at 4,188.60
Tokyo. Brief News from Washington Newsday.