Stock markets spooked by US inflation figures

Stock markets spooked by US inflation figures

London (AFP) – Stock markets see-sawed on Wednesday, as volatility returned following higher-than-expected US consumer price data, rekindling the kind of inflationary fears that had sent world markets into a tailspin last week.

European prices took a hit, briefly tumbling into the red, as higher-than-expected US inflation data fed speculation that US borrowing costs might have to be ramped up very soon. 

US consumer price inflation jumped to 0.5 percent in January, overshooting analysts’ expectations, with one key measure posting its highest increase in a year, the US Labor Department calculated. 

The core consumer price index, which excludes volatile food and fuel categories, rose 0.3 percent, the largest increase since January 2017.

While Wall Street opened lower, European markets see-sawed.

After plunging in an initial response to the data, London’s benchmark FTSE 100 index was back in the black at around 1445 GMT, with Frankfurt’s DAX 30 and the Paris CAC 40 indices also showing modest gains.

US stocks “are lower as a hotter-than-expected consumer price inflation report is resuscitating uneasiness and the recent run in bond yields,” brokers Charles Schwab said in a note to investors.

“Also, disappointing retail sales data is exacerbating sentiment. Treasury yields are rising and the dollar is recovering from a recent resumption of a drop. Asia finished mixed and Europe has given up an early gain.”

– So much for the calm –

Earlier, analysts had noted the return of some semblance of calm to the markets following the recent volatility. 

In Asia, Hong Kong’s main stocks index had closed up more than two percent, extending a rebound from the sell-off last week. 

Tokyo, however, fell to another four-month low as the yen strengthened against the dollar, at one point hitting a 15-month high. 

Investors were also unimpressed by weaker-than-expected economic data for Japan in the last quarter of 2017.

In Europe, the continent’s biggest economy, Germany, expanded by 0.6 percent in the final quarter of last year, official data showed. 

Global stock markets have tumbled in recent weeks, wiping out previous strong gains, largely on concerns that high US inflation will force the Federal Reserve to tighten the cost of borrowing faster than anticipated this year. 

“Given the recent stock market slump, risk aversion has grown, which prompted safe-haven buying of the yen,” Shinichiro Kadota, foreign exchange strategist at Barclays Securities, told AFP.

In corporate activity, shares in pan-European TV giant Sky rallied 2.3 percent to 1,086 pence after the satellite broadcaster beat rival BT to show the bulk of live Premier League football matches in Britain over the next few years.

BT shares rose 0.9 percent to 228 pence.

– Key figures around 1445 GMT – 

New York – DOW: DOWN 0.4 percent at 24,551.75 points

London – FTSE 100: UP 0.6 percent at 7,209.46 

Frankfurt – DAX 30: UP 0.4 percent at 12,245.65

Paris – CAC 40: UP 0.5 percent at 5,132.42 

EURO STOXX 50: UP 0.2 percent at 3,348.75

Tokyo – Nikkei 225: DOWN 0.4 percent at 21,154.17 (close)

Hong Kong – Hang Seng: UP 2.3 percent at 30,515.60 (close)

Shanghai – Composite: UP 0.5 percent at 3,199.16 (close)

Euro/dollar: UP at $1.2324 from $1.2311

Pound/dollar: DOWN at $1.3836 from $1.3841

Dollar/yen: UP at 107.35 yen from 107.14 yen

Oil – Brent North Sea: DOWN 54 cents at $62.18 per barrel

Oil – West Texas Intermediate: DOWN 82 cents at $58.37