European Shares Set For Sluggish Start As Inflation Worries Persist

Business

European stocks may drift lower on Thursday after U.S. consumer price inflation data released overnight did little to ease investor worries over the outlook for inflation and interest rates.

Federal Reserve Bank of St. Louis James Bullard said on Wednesday he was content with a plan to raise interest rates by 50 basis points at each of the next two meetings and would like to see the Fed’s policy rate go up to 3.5 percent by the end of the year.

Asian markets followed Wall Street lower rattled by concerns over interest rate hikes, wider lockdowns in China and the economic fallout from Russia’s continued war in Ukraine.

The dollar and Treasury yields dipped, helping lift demand for greenback-priced gold ahead of U.S. unemployment claims and producer price data due later in the day.

Oil prices fell over 1 percent in Asian trade on recession fears after climbing more than 5 percent on Wednesday.

U.S. stocks saw much volatility before ending sharply lower at their lowest closing levels in over a year overnight as data showed inflation in April rose more than expected to 8.3 percent, raising expectations for aggressive policy tightening and stoking concerns over a possible recession.

The S&P 500 shed 1.7 percent to log its fourth loss in five sessions and the Dow lost 1 percent, while the tech-heavy Nasdaq Composite tumbled as much as 3.2 percent.

European stocks rose for a second straight session on Wednesday, with a handful of upbeat earnings reports and merger activity offering support.

The pan European Stoxx 600 jumped 1.7 percent. The German DAX rallied 2.2 percent, France’s CAC 40 index soared 2.5 percent and the U.K.’s FTSE 100 added 1.4 percent.

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