(Paris) World stock markets remained penalized on Wednesday by the persistence of US inflation, which made investors fear an intensification of the monetary tightening cycle in the United States.
Posted at 8:00 a.m.
In Asia, the Tokyo and Hong Kong stock exchanges lost more than 2%. Shanghai dropped 0.8%.
European markets also suffered in Paris (-0.69%), Frankfurt (-0.52%) and London (-0.94%) at 3:30 a.m., after being cut off in their tracks the day before in the absence the expected slowdown in inflation in the United States.
New York Stock Exchange indexes plunged on Tuesday on the announcement of the CPI consumer price index, which showed a slight rise of 0.1% in prices in August over a month, against a decline of the same extent expected by economists. And year on year, price increases slowed less than expected.
“This is bad news for the market, which had bet on a fairly significant improvement in inflation” and “it shows that for the American Federal Reserve (Fed), the work is not finished”, commented Christian Parisot , economist and head of research for Aurel BGC.
“This fully justifies the Fed raising its rates by 75 basis points next week and maintaining a still quite aggressive tone on inflation”, he adds, even if “it does not call into question the expectations of lower inflation” in the coming months.
Inflation had reached its highest level in more than 40 years in June, before slowing down in July.
Investors, who were hoping for an imminent break in monetary tightening, now fear that the American central bank (Fed) will decide, to curb inflation, to increase its key rates by one percentage point at its next meeting, the September 20 and 21, raising the specter of a recession in the United States.
It raised them by three-quarters of a percentage point in June and July to curb economic activity in order to ease pressure on prices, even if it meant causing a recession and rising unemployment.
Against this backdrop, investors will be watching US producer prices due at 8:30 a.m.
In the United Kingdom, the inflation rate fell in August to 9.9% year on year, after 10.1% in July, but it remains at a high in 40 years and the rise in food prices continued.
Fosun at the lowest in nearly a decade
Shares of Fosun, the private Chinese conglomerate parent company of Club Med, fell to their lowest level in nearly a decade on Wednesday after media reports of a debt review by regulators and despite the group’s denial.
The group’s main company, Fosun International Limited, fell as much as 9.6% in Hong Kong mid-trading to trade at HK$4.41, its lowest level since November 2012.
Inditex (Zara) profit jump
Spanish clothing giant Inditex, owner of the Zara brand, saw its profits jump 41% in the first half, despite high inflation and the closure of its Russian stores due to the war in Ukraine. The action climbed 4.15% to 22.86 euros around 3:20 a.m.
Oil and dollar down
Oil prices continued to decline: a barrel of US WTI lost 1.05% to 86.42 dollars around 3:15 a.m. and a barrel of Brent from the North Sea yielded 1.13% to 92.09 dollars.
On the foreign exchange market, the dollar fell to 143.46 yen around 3:15 a.m. against 144.58 yen at 5 p.m. Tuesday.
The yen appreciated significantly following press reports that the Bank of Japan (BoJ) would have surveyed operators of the foreign exchange market on Wednesday, an extremely rare action often considered as a harbinger of a possible intervention of the bank. Japanese government in this market to support the yen, which is currently trading at its lowest levels against the dollar for 24 years.
Asked by AFP, a BoJ spokesman declined to comment on this information.
The euro was trading for $0.9988 against $0.9969 as of 5 p.m. Tuesday.