LONDON (Businesshala) – Wall Street headed for a steady start on Friday after losses in Europe and Asia as euro zone inflation hit a 13-year high, sparking debate over the timing of interest rates Against a backdrop of patchier global growth.
US stocks looked stable after falling on Thursday, helping European stocks offset earlier losses. US stock futures opened slightly stronger.
All eyes are now on US consumer spending, inflation and factory activity data for signs of economic health later on and clues about the Federal Reserve reducing its asset purchases and raising key interest rates.
On the first day of October, for some of the most notorious market trajectories in history, the STOXX index of 600 European companies initially fell sharply, reaching its weakest level since mid-July, before recovering most of the ground lost. It was down 0.15% at 1149 GMT.
MSCI’s worldwide shares fell 0.2%, its longest daily loss since last February.
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.
“There is a feeling that with October’s reputation, rising energy prices, supply chain disruptions, inflation and concerns about power shortages, October could be quite a windy affair,” Hewson said.
Consumer price inflation in the 19 euro-sharing countries rose to 3.4% year over year in September, up from 3% a month earlier, the highest since the height of the global financial crisis in September 2008.
So far, central bankers have insisted that the rise in inflation is temporary.
“We think this inflation is less tentative than all central banks, including the European Central Bank,” said economist Luigi Speranza of BNP Paribas, suggesting that we think this is the case.
Overnight data showed Asia’s manufacturing activity largely stabilized in September as signs of slowing Chinese growth weighed on the region’s economies, weighing on Asian stocks.
Dollar, Treasury Perks
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 down from Thursday’s one-year high of 94.504, having last changed course at 94.081.
Meanwhile, the benchmark 10-year US Treasury yield is trading at 1.4875% for the sixth straight week.
Japan’s Nikkei fell 2.3% to its lowest level since September 3. An MSCI index of Asia-Pacific shares 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.
“You could argue whether this is a truly stagflation or not, but the whole growth-inflation background seems to be skewed less favorable,” 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 0.13% to $78.20 a barrel, while US crude futures fell 0.3% to $74.78.
Despite traditionally being an inflation hedge and safe haven, gold fell 0.17% to $1,753 an ounce after rising 1.77% on Thursday, its biggest since March.