Stocks diverge ahead of key inflation data in the United States.
Stock markets were largely lower on Tuesday, with all eyes on the latest US inflation statistics, as recent price spikes around the world threaten to undermine the economy’s recovery.
Markets were watching to see if Tuesday’s report on US consumer prices would exacerbate or alleviate concerns about rising inflation.
“There’s always opportunity for a good surprise in inflation numbers because we’re still worried about the global chip shortage, delayed logistics, strong energy and commodity costs, growing salaries, and rising Covid concerns,” Swissquote analyst Ipek Ozkardeskaya said.
Sharp price increases, according to the Federal Reserve, are temporary and do not necessitate a dramatic shift in monetary policy, such as abrupt reduction of the financial stimulus that has kept countries afloat throughout the pandemic.
To keep costs from spiraling out of control, central banks might boost interest rates, raising the cost of the massive government borrowing that occurred during the Covid outbreak.
Inflation has been fueled in recent months by increases in raw material prices.
Despite global crude demand declining for three months in a row as Covid cases rise in Asia, oil prices have rebounded sharply and surged even higher Tuesday.
The International Energy Agency, on the other hand, predicted that oil demand will pick up in October.
The US inflation estimates came as data revealed that the cost of items leaving American factories increased at a record pace last month, owing to increased demand, as well as supply and labor constraints.
The Fed is under pressure as a result of this report to begin reducing its ultra-loose monetary policy as early as November.
Stock markets have been battered by high inflation fears in recent weeks, and the first gain for Wall Street’s S&P 500 and Dow indices following a losing streak last week was not enough to drive a broad advance for Asian and European stock markets Tuesday.
Tokyo, on the other hand, achieved its best result in 31 years on the back of renewed Japanese stimulus.
Concerns about struggling property colossus Evergrande, which is teetering on the verge of bankruptcy owing hundreds of billions of dollars, drove Asian losses.
The company has warned that it is under “extreme strain” as it battles with a liquidity crunch that many fear may push it into bankruptcy and have a negative impact on China’s 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.
The FTSE 100 index in London is down 0.3 percent at 7,047.23 points.
DAX 30 in Frankfurt is up 0.1 percent at 15,708.79.
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