- European stocks at their lowest level since mid-July
- Wall Street also headed for weaker openness
- Stagflation Specter knocks bond yields off 4-month peak
- Power shortage in China, regulatory action shakes the market
LONDON, Oct 1 (Businesshala) – European stocks fell to two-month lows on Friday following slides in Asia and Wall Street, with euro zone inflation data expected to hit 13-year highs, prompting investors Prices are expected to rise. development.
On the first day of October, the STOXX (.STOXX) index of 600 companies fell 0.9%, hitting its weakest level since mid-July, for some of the most notorious market trajectories in history.
MSCI’s worldwide gauge of shares (.MIWD00000PUS) dropped 0.4%, pointing to a further decline in US stock futures.
Michael Hewson, Chief Market Analyst at CMC Markets, said that with the spectacular economic growth data now in the rear-view mirror, the markets were looking ugly in October.
Overnight data showed Asia’s manufacturing activity largely stabilized in September as signs of slowing Chinese growth weighed on the region’s economies.
“There is a feeling that with October’s reputation, concerns about rising energy prices, supply chain disruptions, inflation and concerns about power shortages, October could be quite a windy affair,” Hewson said.
The headline euro zone inflation flash estimate is due 0900 GMT, with UniCredit expecting a year-on-year increase of 3.3%, which would be its highest level since 2008.
“We expect headline inflation to approach 4% in November,” UniCredit analysts said in a note.
Dollar spoils the mood
US stock futures pointed to a 0.60% decline for the S&P 500 overnight (.SPX) after the index lost 1.19%, ending its worst month since March of last year.
However, the dollar began the final quarter of 2021 near its highest level of the year, and is headed for its best week since June as currency markets brace for US interest rates to rise ahead of key peers. .
The dollar index, which measures the currency against six major rivals, was off Thursday’s one-year high of 94.504, having previously changed hands at 94.287. Meanwhile, the benchmark 10-year US Treasury yield stood at 1.5013%.
In Asia, Japan’s Nikkei (.N225) fell 2.3% to its lowest level since September 3. An MSCI index of Asia-Pacific shares (.MIAP00000PUS) fell 1.22% to its lowest level since August 24.
Chinese markets are closed for a week from Friday on account of the Golden Week holiday.
Debate continued as to whether rising inflation coupled with weak growth was a recipe for stagflation.
“You could argue whether this is a truly stagflation or not, but the whole growth-inflation background seems to be skewed towards a less favorable one,” said Rob Carnell, head of Asia-Pacific research at ING in Singapore.
Federal Reserve Chairman Jerome Powell said Wednesday that resolving the “tension” between high inflation and high unemployment is the Fed’s most urgent issue, acknowledging a potential conflict between the US central bank’s two goals of stable prices and full employment. Is.
The latest clues on the Fed’s policy normalization path come with US personal spending and core consumption deflator data later in the day.
Crude oil prices continued to fall after Brent hit $80 a barrel for the first time in three years.
Brent crude futures slipped 0.5% to $77.92 from Thursday, while US crude futures fell 0.6% to $74.57.
Despite traditionally being an inflation hedge and safe haven, it lost 0.26% to $1,752 an ounce, the biggest since March, after rising 1.77% on Thursday.