World stock markets turned in mixed performances Wednesday as the outlook for inflation and growth were in the spotlight.
Asia fell as a slowdown in US consumer inflation failed to overcome Covid concerns, with Hong Kong dragged by a collapse in casino firms as Macau unveiled a planned crackdown on the sector.
Europe’s main markets fell, with London hit by data showing UK annual inflation spiked to a nine-year peak of 3.2 percent in August.
That came one day after news that US inflation slowed to 5.3 percent in August from a 13-year high.
Wall Street was mixed, with the Dow and S&P 500 modestly higher in late morning trade, while the tech-heavy Nasdaq Composite drifted lower.
Markets have seesawed this year over concerns that central banks will end Covid support measures to tame inflation.
Policymakers insist elevated prices will be temporary — but investors appear unsure.
“Inflation is certainly becoming a growing concern, with expectations for tapering and rate hikes,” OANDA analyst Craig Erlam told AFP.
“The recent softening in the US is providing some relief but the Fed is still expected to taper this year and further tightening won’t be that far behind.”
Erlam added that inflationary concerns could “act as a headwind for equity markets in the final months of the year”.
After a bright start to September, most equities around the world have also gone into reverse in recent sessions as confidence is shaken by the Delta coronavirus variant.
A number of countries have faced a worrying jump in new cases that have forced some, including China, to reimpose tough containment measures. Those could cause another economic slowdown.
“We have seen increased signs of risk aversion across the financial markets in recent days, possibly because of fears over a slowdown in economic growth and rising inflation — or in other words, stagflation,” said ThinkMarkets analyst Fawad Razaqzada.
Oil prices jumped around 3 percent as hurricanes have hampered production in the Gulf of Mexico, while natural gas prices have hit records in Europe.
“With energy prices soaring across Europe, the economic outlook is starting to look increasingly uncertain, and while central banks are likely to take that into account, the fact remains that the rebound which was looking so solid a couple of months ago is starting to show signs of slowing markedly,” said Michael Hewson, chief market analyst at CMC Markets UK.
Investors are also having to grapple with a range of other issues including China’s regulatory crackdown on private enterprises, including the high tech sector.
Asian markets were under pressure, with below-par retail sales data a further indication that the pace of growth in China’s economy continued to slow in August.
Hong Kong led losses, with Macau casino operators collapsing as they became the latest to fall into China’s regulatory crosshairs.
Anxiety meanwhile runs high over a possible default by Chinese property giant Evergrande, whose debts stand at more than $300 billion.
New York – Dow: UP 0.3 percent at 34,664.25 points
EURO STOXX 50: DOWN 0.9 percent at 4,152.84
London – FTSE 100: DOWN less than 0.1 percent at 7,030.45 (close)
Frankfurt – DAX 30: DOWN 0.7 percent at 15,616.00 (close)
Paris – CAC 40: DOWN 1.0 percent at 6,583.62 (close)
Tokyo – Nikkei 225: DOWN 0.5 percent at 30,511.71 (close)
Hong Kong – Hang Seng Index: DOWN 1.8 percent at 25,033.21 (close)
Shanghai – Composite: DOWN 0.2 percent at 3,656.22 (close)
Euro/dollar: UP at $1.1817 from $1.1803 at 2100 GMT Tuesday
Pound/dollar: UP at $1.3842 from $1.3810
Euro/pound: DOWN at 85.37 pence from 85.47 pence
Dollar/yen: DOWN at 109.39 yen from 109.69 yen
Brent North Sea crude: UP 3.0 percent at $75.79 per barrel
West Texas Intermediate: UP 3.4. percent at $72.82 per barrel