Global markets wavered on Wednesday after yesterday’s inflation report showing stubbornly high price increases in the United States prompted stocks to plummet.
The S&P 500 rose 0.27 percent at the beginning of trading after falling 4.3 percent on Tuesday, representing its largest decline since June 2020. The Nasdaq, which also had its worst day since 2020 on Tuesday, fell 0.18 percent.
Europe’s Stoxx 600 index fell 1.09 percent, extending losses from the previous day, when the U.S. inflation numbers spooked investors near the end of the trading day. Industrial production in the eurozone fell by more than expected in July, according to data released on Wednesday, a “nosedive” which Claus Vistesen, the chief eurozone economist at Pantheon Macroeconomics wrote was “consistent with our view that the economy is now entering a technical recession, due in part to softening activity in the industrial sector.”
Britain’s FTSE 100 fell 1.5 percent after a new report showed inflation in the country eased slightly last month, to 9.9 percent, but remains near a 40-year high.
By the end of trading, Japan’s stock market had fallen by 2.8 percent. Australia’s stock exchange was down by 2.6 percent and Hong Kong’s Hang Seng Index by 2.5 percent. The CSI 300 Index of large Chinese companies’ share prices was down by more than 1 percent.
Investors in the United States were caught off guard on Tuesday by a report showing that consumer prices had risen by 8.3 percent through August. That cut against economists’ expectations and forced investors to reconsider how much the Federal Reserve may need to raise interest rates — a move that would make borrowing more expensive for consumers and companies.
Biggest One-Day Loss in This Bear Market
Daily percentage changes in the S&P 500 since its peak on Jan. 3
One explanation for why Asian markets did not fare as poorly as Wall Street “may be that there isn’t such a big link” between what the Fed will have to do with interest rates and what Asia Pacific countries will have to do, said Rob Carnell, the head of research in the region for ING Bank.
Inflation is generally up by less in Asia than in the United States or Europe, Mr. Carnell said in an email. Possible reasons include a slower emergence from coronavirus pandemic restrictions, greater access to semiconductors and asymmetric exposure to elevated shipping costs.
“There is also more management of prices, through subsidies, and state-owned energy firms for example, which allows a price shock to be converted into a fiscal shock,” he added.
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September 14, 2022 at 05:33PM
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