European Shares Seen Lower As Inflation Worries Mount
European stocks are seen opening lower on Wednesday as investors fret about rising inflation and ponder over the outlook on interest rates.
The focus is on U.S. consumer price inflation data due out later in the day that could test the Fed’s stance on rate hikes.
San Francisco Fed President Mary Daly on Tuesday said it will be mid-2022 before there is clarity on the true state of the labor market and the outlook for inflation.
Separately, St. Louis Fed President James Bullard told CNBC that he’s currently expecting the U.S. central bank to hike its benchmark rate twice in 2022.
Data showed earlier today that China’s factory-gate prices grew at the fastest pace in 26 years in October due to imported inflation and tight domestic supply of major energy and raw materials.
Consumer inflation rose an annual 1.5 percent in the month, quickening from September’s 0.7 percent rise due to factors such as weather conditions, tight supply of some goods and rising costs.
Asian markets fell broadly, with Chinese and Hong Kong markets leading regional losses on concerns about liquidity woes spreading in China’s property sector.
Shares of Fantasia Holdings Group plunged by nearly half to a record low in Hong Kong at one point after the debt-laden Chinese developer defaulted on a U.S. dollar bond and further warned there is no guarantee it could meet other financial obligations.
Meanwhile, China Evergrande Group is due to make coupon payments totaling US$148.1m by today U.S. time. Failure to make payment would be a default.
Gold retreated from a more than two-month high as the dollar strengthened amid escalating inflation concerns.
Oil extended overnight gains after industry data showed a surprise decline in U.S. crude stocks last week. Bitcoin held around $67,000, not far from the record high.
U.S. stocks slipped from record levels overnight as Treasuries surged, Bitcoin hit new records and data showed producer prices increased solidly in October, suggesting that high inflation could persist for a while.
The S&P 500 gave up 0.4 percent to snap an eight-day winning streak and the tech-heavy Nasdaq Composite shed 0.6 percent to snap an 11-day winning run, while the Dow eased 0.3 percent.
European stocks also retreated from a record high Tuesday amid concerns surrounding inflation and Evergrande.
The pan European Stoxx 600 fell 0.2 percent. The German DAX and France’s CAC 40 index both finished marginally lower, while the U.K.’s FTSE 100 declined 0.4 percent.
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