Easing consumer inflation in the United States helped relieve concerns about the need for a quick rise in interest rates
London (AFP) - US and European stock markets were bound in a narrow range Tuesday, as US inflation data showed price pressures slightly easing amid concern recent surges risk knocking the economic recovery off track.
US stock futures initially rose and the dollar sagged on news consumer prices rose 5.3 percent in August on the same month last year and just down from July’s 13-year high of 5.4 percent – seemingly backing the US Federal Reserve’s belief rises will be short term.
“It looks like the Fed may have got inflation right,” said analyst Edward Moya at OANDA.com.
“An inflation slowdown could be what is needed to justify their taper delay and suggests they have a couple more months to see how the labor market recovery unfolds.”
But as traders digested the news, the gains in stock prices faded with the Dow slipping into the red by late morning.
Moya said investors began to worry about profit margins as data shows companies are not passing on price increases to consumers.
In Europe, both London and Paris ended the day lower while Frankfurt edged higher.
Investors have been preoccupied in recent months that a surge in inflation could force central banks to quickly withdraw stimulus measures and raise interest rates, undermining the economic recovery from the pandemic.
The Fed has argued that sharp price increases are transient and do not require an abrupt shift in monetary policy.
In Asian trading, Hong Kong and Shanghai fell on concerns about troubled property titan Evergrande, which is teetering on the brink of bankruptcy owing hundreds of billions of dollars.
The firm has warned it is under “tremendous pressure” amid a cash crunch that many fear could send it under and have a severe impact on the Chinese economy.
Evergrande’s Hong Kong-listed shares fell nearly 12 percent and have lost around 80 percent since the start of the year.
But Tokyo clocked up its highest finish in 31 years on hopes for fresh Japanese stimulus.
Oil prices have bounced back strongly, and inched up despite the International Energy Agency saying global crude demand had dropped for three straight months as Covid cases rise in Asia.
But it added that oil demand was expected to rebound in October.
- Key figures around 1530 GMT -
New York - Dow: DOWN 0.5 percent to 34,706.42 points
London - FTSE 100: DOWN 0.5 percent at 7,034.06 (close)
Frankfurt - DAX 30: UP 0.1 percent at 15,722.99 (close)
Paris - CAC 40: DOWN 0.4 percent at 6,652.97 (close)
EURO STOXX 50: FLAT at 4,188.60
Tokyo - Nikkei 225: UP 0.7 percent at 30,670.10 (close)
Hong Kong - Hang Seng Index: DOWN 1.2 percent at 25,502.23 (close)
Shanghai - Composite: DOWN 1.4 percent at 3,662.60 (close)
Euro/dollar: UP at $1.1820 from $1.1815 at 2040 GMT
Pound/dollar: UP at $1.3842 from $1.3839
Euro/pound: UP at 85.39 pence from 85.34 pence
Dollar/yen: DOWN at 109.67 yen from 110.01 yen
Brent North Sea crude: UP 0.2 percent at $73.67 per barrel
West Texas Intermediate: UP 0.2 percent at $70.61 per barrel