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US inflation data pressures markets

US and European stocks dipped on Thursday as the latest inflation data out of the world’s largest economy showed a higher-than-expected rise in consumer prices, fuelling concerns over the Federal Reserve's (Fed) next steps. Market sentiment turned cautious ahead of key economic data and the start of the third-quarter earnings season to finish the week. Asian markets were mixed on Friday, with investors anticipating further stimulus measures from China to bolster economic growth.

Data
Autore
Shane Strowmatt, LGT
Tempo di lettura
5 minuto

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The US consumer price index rose by 0.2% in September, bringing the annual inflation rate to 2.4%, slightly higher than the market had anticipated. This figure is nevertheless slightly lower than August's 2.5% and marks the lowest rate since February 2021. Core inflation, excluding food and energy, increased by 0.3% for the month, resulting in a 3.3% annual rate. Concurrently, initial jobless claims surged to 258,000, the highest since August 2023, influenced by Hurricane Helene and a strike at aircraft maker Boeing.

US equities slipped somewhat on Thursday, pressured by the inflation data. The Dow Jones Industrial Average closed at 42,454.12 points, losing 0.1%, while the S&P 500 dropped 0.2% to finish at 5780.10 points. The tech-heavy Nasdaq-100 fell 0.1% to 20,241.76 points. All eyes are on JPMorgan, which kicks off the corporate earnings season later Friday.

Investors expecting more Chinese stimulus

China's Finance Ministry is expected to announce significant fiscal stimulus measures on Saturday to support the economy, which is at risk of missing its 5% annual growth target. Earlier this week, the National Development and Reform Commission's limited actions led to market volatility. The announcement would follow previous measures, including rate cuts and eased property rules, aimed at reviving economic growth. Mainland China’s CSI 300 dropped 2.3%, while markets in Hong Kong were closed on Friday due to a public holiday.

Bank of Korea cuts interest rates

Stocks elsewhere in the Asia-Pacific region were mixed on Friday. Japan’s Nikkei 225 was trading 0.6% higher, while Australia’s S&P/ASX 200 was down 0.1%. Korea’s Kospi was essentially flat after the country’s central bank reduced its benchmark interest rate by 25 basis points to 3.25% on Friday, marking the first cut since 2020. This decision follows a period of rate hikes that began in August 2021, which saw rates peak at 3.5% in January. The Bank of Korea cited stabilising inflation, which fell to 1.6% in September from 2.6% in January and easing risks in the foreign exchange market as reasons for the cut.

Oil prices surge on US storm fears

Oil prices shot up on Thursday, with Brent futures increasing to more than USD 79 per barrel and West Texas Intermediate (WTI) crude rising to nearly USD 76 per barrel. This spike is attributed to heightened US fuel consumption ahead of Hurricane Milton, which has caused significant disruptions in Florida, including power outages and fuel shortages. Additionally, concerns over potential Middle East supply disruptions due to escalating tensions between Iran and Israel have also contributed to the price increase.

German retail sales increase in August

Retail sales in Germany rose by 1.6% in August 2024 compared to July 2024, both in real and nominal terms, according to Destatis data released on Thursday. This follows a 1.5% real increase in July and contrasts with declines in May and June. Compared to August 2023, retail sales were up by 2.1% in real terms.

European stock indices were broadly lower on Thursday. The STOXX Europe 600 edged down 0.2%, while Germany’s DAX and France’s CAC 40 both also posted losses of 0.2%. The Swiss Market Index fell by 0.3%.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from BlackRock, JPMorgan Chase, and Wells Fargo.

Economic data in focus: German harmonized consumer price index (08:00), UK gross domestic product (08:00), UK manufacturing production (08:00), Canadian unemployment rate (14:30), US producer price index (14:30), University of Michigan Consumer Sentiment Index (16:00).

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Editor: Alessandro Fezzi
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