Stocks mostly lower on inflation, Covid concerns
Stock markets mostly fell on Thursday as investors displayed caution over fears of rising inflation and a resurgence of the coronavirus pandemic.
Asian shares finished lower.
“I feel like we’re in a bit of a wait-and-see mode at the moment,” OANDA senior market analyst Craig Erlam told AFP.
After a strong company earnings season, markets are weighing the potential “downside risks” of a slew of issues — from high energy prices to central bank decisions on interest rates to rising Covid-19 cases in the US and Europe, Erlam said.
“It seems there is apprehension and caution in the markets,” he said.
Neil Wilson, chief markets analyst at Markets.com, said there “seems to have been a risk-off mode since mid-morning”.
“Lots of chopping around the all-time highs in US and Europe as we hit the back end of earnings season, some mixed earnings reports, lack of any new catalysts for bulls,” he said.
The European single currency ticked upwards after tanking on Wednesday to $1.1264 — the lowest level since July 2020.
Oil prices briefly touched one-month lows on Thursday on lower demand concerns.
Inflation has surged worldwide, raising concerns that central banks will raise interest rates sooner than expected to prevent economies from over-heating.
But European Central Bank president Christine Lagarde said this week that the ECB did not expect to raise interest rates next year, in contrast to much sooner tightening expected by the Bank of England and the US Federal Reserve.
While eurozone inflation will hit a record high in November, it is expected to decline over the course of next year, a senior ECB policymaker predicted on Wednesday.
– Inflation soars –
“Asia finished mostly lower and Europe is sluggish amid the continued grappling with the supply chain issues and inflation pressures,” said analysts at Schwab.
Data out on Wednesday showed inflation close to a decade high in Britain and an 18-year peak in Canada.
That came one week after news that US inflation surged to the highest level since 1990.
Investors are fearful that massive financial stimulus — coupled with resurgent post-lockdown demand and supply-chain snarl-ups — could send consumer prices rocketing even further.
In the United States, new data showed a very slight decline in new unemployment claims last week, an unsurprising result indicating the US labour market continues to recover from last year’s pandemic downturn.
Also on Thursday, the Turkish lira sank to an all-time low of 11.30 against the US dollar after the central bank slashed interest rates for the third consecutive month.
President Recep Tayyip Erdogan — who believes high interest rates cause inflation, the exact opposite of conventional economic theory — pushed for the rate cut.
“Just a pretty ludicrous move,” BlueBay Asset Management economist Timothy Ash said, adding that the decision was “really dangerous for lira and for Turkey”.
– Key figures around 1645 GMT –
New York – Dow: DOWN 0.3 percent at 35,834.79 points
New York – NASDAQ: UP 0.4 percent at 15,987.25 points
EURO STOXX 50: DOWN 0.4 percent at 4,383.85
Hong Kong – Hang Seng Index: DOWN 1.3 percent at 25,319.72 (close)
Shanghai – Composite: DOWN 0.5 percent at 3,520.71 (close)
Euro/dollar: UP at $1.1356 from $1.1319 at 2200 GMT
Pound/dollar: DOWN at $1.3480 from $1.3487
Euro/pound: UP at 84.22 pence from 83.93 pence
Dollar/yen: UP at 114.25 yen from 114.08 yen
Brent North Sea crude: UP 0.7 percent at $80.97 per barrel
West Texas Intermediate: UP 0.8 percent at $78.16 per barrel