London (AFP) – A hotter-than-expected inflation reading dented Wall Street stocks on Wednesday, while the dollar and bond yields pushed higher as investors pencilled in a higher chance the Federal Reserve would raise interest rates later this month. The consumer price index (CPI) was up more than analysts expected in September, rising 3.7 percent on a year-on-year basis, the Labor Department said. It was a marked acceleration from the 3.4 percent reading in August. Economists had forecast a slightly cooler reading of 3.6 percent, according to MarketWatch.
“Today’s CPI report came in hot, with annual headline inflation reaching its highest level since May,” said eToro analyst Bret Kenwell. “The knee-jerk reaction may be for traders to reassess the odds of a Fed rate hike later this month,” he said. Investor expectations of a quarter-point rate hike at this month’s Fed meeting nearly doubled to 44 percent after the data was published, according to the CME Fedwatch tool.
“The equity futures market, which had been tracking higher in front of the CPI report, did an about-face in its wake, largely because Treasury yields spiked following the release,” said Briefing.com analyst Patrick O’Hare. Wall Street’s main indices opened mostly lower, with the S&P 500 shedding 0.4 percent and the Nasdaq Composite giving up 0.6 percent.
In Europe, London, Paris, and Frankfurt all rose in afternoon trading, after Asian equities struggled to claw back the previous day’s steep tech losses. Tech firms had taken a hammering on Tuesday amid concerns about China’s progress in developing AI chips and following comments by Broadcom’s chief executive likening the AI buying frenzy to gambling. Tokyo and Seoul, both with big tech weightings, closed lower again on Wednesday. Hong Kong and Shanghai also fell, with investors appearing unmoved by data showing China’s exports picked up pace in September and soared 36.3 percent, far more than expected.
Investors also assessed largely upbeat earnings from Dutch chipmaking equipment giant ASML, which reported record sales and strong profits on huge demand for AI. ASML shares rose more than two percent at the opening bell on the Amsterdam stock market, before handing back the gains. The firm, a critical cog in the global economy and a bellwether for the semiconductor sector, said demand was currently outstripping supply, leading it to seek ways to boost capacity for 2028.
Shares in Lufthansa shed 1.9 percent after Portugal announced the German airline group had been chosen to take a 44.9 percent stake in TAP for 1.03 billion euros as part of the reprivatisation of the airline. Oil prices diverged on Wednesday as worries swirled over the Middle East crisis, with Iran stepping up attacks in the Strait of Hormuz and Houthis pressing ahead with their strikes on oil kingpin Saudi Arabia.
– Key figures at around 1330 GMT –
New York – Dow: FLAT at 51,671.90 points
New York – S&P 500: DOWN 0.4 percent at 7,776.63
New York – Nasdaq Composite: DOWN 0.6 percent at 27,032.44
London – FTSE 100: UP 0.3 percent at 10,684.51
Paris – CAC 40: UP 0.6 percent at 7,873.91
Frankfurt – DAX: UP 0.5 percent at 25,390.99
Tokyo – Nikkei 225: DOWN 0.1 percent at 67,744.29 (close)
Hong Kong – Hang Seng Index: DOWN 0.1 percent at 24,314.17 (close)
Shanghai – Composite: DOWN 0.9 percent at 3,767.23 (close)
West Texas Intermediate: UP 1.4 percent at $95.43 per barrel
Brent North Sea crude: DOWN less than 0.1 percent at $105.65 per barrel
Euro/dollar: DOWN at $1.1133 from $1.1200 on Tuesday
Pound/dollar: DOWN at $1.3199 from $1.3256
Dollar/yen: UP at 158.87 yen from 158.32 yen
Euro/pound: DOWN at 84.32 pence from 84.49 pence
© 2024 AFP
