Stocks Fall Amidst Caution with US Inflation Report AheadAugust 10, 2022
Share prices have been tumbling and the US Dollar is hanging off its recent high levels as of Tuesday. Investors are looking ahead to the publication of the US inflation reports which are due on Wednesday. It will possibly give leads on any more Federal Reserve interest rate increases.
The CPI’s Fearful Foundation
The stakes are now stacked high against the consumer price index for July. This is probably the result of the unexpected upbeat report that the US jobs report produced. The jobs report increased the expectations that there will be another sharp increase in interest rates to combat inflation.
The general European Stoxx 600 lost 0.6% after it logged its best performance in almost two weeks. German stocks also went down by 0.7%. Auto producers and miners who were the top gainers on Monday led the decline on Tuesday.
CMC’s Chief Market Analyst, Michael Hewson, said the market’s attention is on Wednesday’s US inflation figures. The market is also looking if the figures will give clues about inflation pressures or not.
Wall Street closed on a generally flat note on Monday because the huge jobs report from last week increased expectations of a higher rate increase. Meanwhile, Nvidia’s revenue situation called investors’ attention back to the sluggish US economic growth.
Asia-Pacific Stocks React
The US Dollar is holding just a tad bit under its latest height as traders get wary of any move that might cause interest rates to rise again. In comparison to a host of other fiat currencies, the US Dollar was down just by a fraction to maintain 106.14.
The MSCI equity index that keeps track of shares in about 47 countries dropped by 0.1%. Before now, the MSCI’s general index of the Asia-Pacific stock market, apart from Japan, was on a flat note. This was after it gave up on its modest gains.
Japan’s Nikkei dropped by 0.95% after it suffered some weak earnings this quarter. Note that Nikkei incorporated some heavyweights and caused a reduced expectation around the video game industry.
There is now a lot of caution in the stock and money markets. The bonds market is not left behind as the Eurozone’s bonds yields stabilize. The bloc’s benchmark, the German ten-year yield, remains steady at 0.90%.
The US Federal Reserve got some encouraging signs as a New York survey it conducted revealed that the expected consumer inflation dropped in July.