Stock market falls as US inflation comes into view
Major stock markets in Asia and Europe were mostly lower on Monday as investors awaited this week’s release of key U.S. inflation data that could guide the Federal Reserve’s interest rate plans for the new year.
Oil prices fell nearly 2% as OPEC and its allies waited for a meeting to decide production levels to be postponed.
There was little activity on Wall Street late last week due to the Thanksgiving holiday, and while analysts were optimistic heading into the end of the year, traders had little incentive to take action.
The drop in stocks comes after global stock markets recently surged, driven by expectations that the U.S. central bank is done raising interest rates as inflation falls and the job market comes out of the boil.
Expectations that the U.S. Federal Reserve will end its rate hikes continued to weigh on the dollar on Monday.
The focus this week is on Thursday’s release of the personal consumption expenditures (PCE) price index, the Fed’s preferred measure of inflation.
“These numbers will be closely scrutinized to gain insight into inflation trends and the potential impact on monetary policy decisions,” said Stephen Innes of SPI Asset Management.
“While the current situation does not mean ‘mission accomplished’ in terms of combating inflation, policymakers must now focus on planning for the next phase of the economic struggle.”
Still, observers are optimistic about the outlook, attributing the recent weakness to traders taking a breather after a strong month.
IG Group’s Tony Sycamore said there could be some selling in early December as investors “try to rebuild their energy and prepare for the year-end fireworks.”
Wall Street’s VIX, or fear gauge, which measures stock price volatility, has fallen to its lowest level since January 2020, suggesting investors are getting their mojo back, some say.
OPEC’s developments are also in the spotlight after OPEC and its allies, particularly Russia, postponed a meeting aimed at agreeing on production quotas, with some African countries balking at Saudi Arabia’s demands for further production cuts. It is said that it shows.
The group is believed to be close to a deal between Saudi Arabia and Russia that could extend output cuts until the new year.
A slowdown in the economy, particularly China, appears to be reducing demand, oil prices have fallen in recent weeks, and the Middle East conflict does not appear to have spread to involve other countries in the region.
– Main figures around 1115 GMT –
London – FTSE 100: down 0.2%, 7,475.63 points
Paris – CAC 40: Flat 7,290.48
Frankfurt – DAX: down 0.2% to 16,000.18
Euro STOXX 50: down 0.1% to 4,367.07
Tokyo – Nikkei Stock Average: 33,447.67 (closing price), down 0.5%
Hong Kong Hang Seng Index: 0.2% lower at 17,525.06 (closing price)
Shanghai – Overall: down 0.3% to 3,031.70 (close price)
New York – Dow: up 0.3% to 35,390.15 (close)
EUR/USD: rose from $1.0922 to $1.0954
GBP/USD: up from $1.2585 to $1.2620
EUR/GBP: down from 86.79p to 86.77p
USD/JPY: fell from 149.56 yen to 148.94
West Texas Intermediate: down 1.9% to $74.12 per barrel
North Sea Brent crude oil: down 1.7% to $79.19 per barrel
Source: guardian.ng