Stocks fall on inflation, Covid concerns

Traders are keeping a close eye on the Federal Reserve and its plans for monetary policy in light of surging inflation. ©AFP

London (AFP) - Stock markets fell on Thursday as investors fret over rising inflation and a resurgence of the coronavirus pandemic. 

Frankfurt's benchmark DAX index and the Paris CAC 40 retreated in afternoon trading after reaching new records earlier in the day.London was also down.

Wall Street opened mixed but all three major US markets were down later in the morning.

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.

The European single currency held firm after tanking on Wednesday to $1.1264 -- the lowest level since July 2020.

Oil prices briefly touched one-month lows Thursday on lower demand concerns but were flat later in the day.

Inflation has surged worldwide, raising concerns that central banks will cut ultra-lower 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 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 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.

The Philadelphia Federal Reserve Bank reported Thursday that its manufacturing index climbed above expectations last month, though prices also increased as the country deals with a wave of inflation.

Key figures around 1520 GMT

New York - Dow: DOWN 0.7 percent at 35,704.73 points

London - FTSE 100: DOWN 0.6 percent at 7,251.27 

Frankfurt - DAX: DOWN 0.3 percent at 16,199.46

Paris - CAC 40: DOWN 0.2 percent at 7,169.16

EURO STOXX 50: DOWN 0.2 percent at 4,391.63

Tokyo - Nikkei 225: DOWN 0.3 percent at 29,598.66 (close)

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 $1.1352 from $1.1319 at 2200 GMT

Pound/dollar: DOWN at $1.3480 from $1.3487

Euro/pound: UP at 84.21 pence from 83.93 pence

Dollar/yen: UP at 114.26 yen from 114.08 yen

Brent North Sea crude: FLAT at $80.31 per barrel

West Texas Intermediate: FLAT at $77.56 per barrel

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