Title: U.S. Inflation Data and Global Economic Concerns Weigh on Stock Markets
Date: August 10, 2022
Investors are closely watching the release of U.S. inflation data and its impact on global economic outlook, while concerns over deflation in China further heighten market volatility. On Thursday, the market expects the U.S. core consumer price index (CPI) to show a 4.8% increase in July from the same period last year, holding steady from the previous month’s figures. Additionally, China will release its inflation data for July on Wednesday, with traders paying close attention to any signs of deflation in the world‘s second-largest economy.
Federal Reserve officials’ speeches shed light on their stance towards interest rate hikes and policy easing. Philadelphia Fed President Patrick Harker believes that if the upcoming data released before mid-September does not surprise the market, it is likely that the Fed may pause interest rate hikes and maintain the current rate for a period of time. He also sees no immediate need for policy easing. However, Thomas Barkin, president of the Federal Reserve Bank of Richmond, highlights that although the US economy, employment, and consumer markets are still resilient, inflation remains high.
The European and American stock markets witnessed declines on Tuesday due to below-expectation trade data from major economies, triggering concerns about the global economic outlook. Moody’s downgrade of credit ratings for 10 small and medium-sized U.S. banks further exacerbated market sentiment. By the end of the trading day, the Dow Jones Industrial Average fell 158 points or 0.45% to 35,314 points; the S&P 500 and Nasdaq Composite also declined by 0.42% and 0.79%, respectively.
Banking stocks faced significant selling pressure, with Citigroup, Bank of America, Goldman Sachs, and JPMorgan witnessing notable decreases in their stock prices. Additionally, UPS, the global leader in express delivery, experienced a decline of 0.88% after Ubito’s second-quarter revenue fell and the company reduced its full-year revenue forecast due to weaker e-commerce demand and lower package volumes.
European stocks closed down 0.23% on Tuesday, with notable declines in major indices such as the CAC 40, DAX, and FTSE 100.
In Asian markets, A-shares and Hong Kong stocks faced declines, with the former falling 0.25% and the latter dropping by 1.8%. Other Asian stock markets mostly closed with slight fluctuations.
In the commodity market, China’s poor export data led to a temporary drop in international oil prices. However, expectations for stable local demand and the release of upcoming U.S. crude oil inventory figures are predicted to reverse the downward trend. On Tuesday, crude oil prices closed up 98 cents or 1.2% at $82.92 a barrel.
Safe-haven buying drove the increase in the dollar index, which rose by 0.73%. The euro and the pound sterling both depreciated against the dollar due to concerns over the economic outlook in Europe. The Japanese yen also weakened against the dollar.
In conclusion, the release of U.S. inflation data, concerns over deflation in China, and global economic uncertainties continue to impact stock markets worldwide. Investors remain cautious as they await further information and data releases to make informed investment decisions.
(Editor: Li Shanwen)