Wall Street shares drop as inflation worries offset Chinese-US optimism

  • Wall Street stocks cancel initial gains after inflation data
  • Oil over supply problems in the United States

WASHINGTON / LONDON, Sept. 10 (Reuters) – The main Wall Street indices ended lower on Friday after data showing persistent inflation in the United States offset expectations of an easing of US-China tensions after a call between President Joe Biden and Chinese Xi Jinping.

Producer prices in the United States rose sharply in August, indicating that high inflation is expected to persist for some time as supply chains remain strained as the COVID-19 pandemic continues.

“Headlines reflecting the highest annual producer price increases in decades will not reassure those worried about inflation, but the smallest month-over-month increase and recent evidence indicating That supply chain bottlenecks no longer intensify suggests that a producer inflation spike may be near, ”said Marc Zabicki, research director at LPL Financial.

The Dow Jones Industrial Average (.DJI) fell 64.65 points, or 0.19%, to 34,814.73; the S&P 500 (.SPX) lost 4.21 points, or 0.09%, to 4,489.07 and the Nasdaq Composite (.IXIC) lost 3.20 points, or 0.02%, to 15,245, 06.

Earlier, global stock markets rose after the announcement that the US president and his Chinese counterpart held 90 minutes on Thursday, their first interview in seven months, discussing the need to avoid conflict between the two biggest world economies. Read more

Chinese stocks (.CSI300) rose 0.08%, boosting the region and lifting the MSCI World Index (.MIWD00000PUS), its largest indicator of global stock markets by 0.07%, on the way to ending a three-day losing streak.

Despite the gains, helped by a similar performance in major European markets, the index remains down 0.6% for the week and on track for its first decline in three, although it is close to a record.

Apple Inc (AAPL.O) fell more than 3% following a US court ruling in the antitrust lawsuit of “Fortnite” creator Epic Games that rolled back some of the iPhone maker’s restrictions on how whose developers can collect payments in apps.

The pace at which central banks, particularly the US Federal Reserve and the European Central Bank, choose to scale back economic support remains the driving force behind market sentiment amid mounting inflationary concerns.

Thursday’s decision by the ECB to reduce bond purchases slightly is expected to be followed by the Fed later this year, some officials say, despite a weak US jobs report in August. Read more

“With the ECB raising its economic projections for 2022 and beyond, it appears that the ceiling on political accommodation has been exceeded,” said Mark Dowding, chief investment officer at BlueBay Asset Management.

Looking ahead, Dowding said next week’s US inflation could help dictate the market direction in the near term.

Despite the prospect of squeezed stimulus packages, Mark Haefele, chief investment officer at UBS Global Wealth Management, said he expected central banks to keep interest rates low.

“This is positive for the equity markets, especially the cyclical and value sectors of the market. And while it complicates the search for yield, we continue to see opportunities,” he wrote in a note. to customers.

“In currencies, we believe that a long position in GBP and NOK and short in EUR and CHF should provide a mid to high single-digit percentage rise on a total return basis over the six to 12 years. next months. “

Amid a broader risk environment and despite lingering concerns over COVID infection rates, the greenback rose 0.1% against a basket of major peers.

The euro lost 0.12% for the last time, to $ 1.1811, while the broad European index FTSEurofirst 300 (.FTEU3) fell 0.23% to 1,796.26.

The yield on benchmark 10-year Treasury bills rose after inflation data in the United States.

Elsewhere in currencies, the pound fell 0.01% despite data showing Britain’s economic recovery slowed in July. Read more

Oil climbed to $ 73 a barrel following signs of limited supplies in the United States after Hurricane Ida hit production.

Brent crude rose to $ 1.47, or 2.3%, at $ 72.92. The high for the session was $ 73.15 per barrel. U.S. West Texas Intermediate (WTI) crude rose $ 1.58, or 2.3%, to $ 69.72.

Gold held a narrow range due to uncertainty over the Fed’s cut schedule. US gold futures were down 0.4% to $ 1,792.1 an ounce.

Additional reporting by Alun John in Hong Kong; Editing by Raissa Kasolowsky, Steve Orlofsky, Dan Grebler and Jonathan Oatis

Our Standards: The Thomson Reuters Trust Principles.

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