(Paris) Stock markets are trending lower on Friday as the release of lower-than-expected US inflation failed to allay all investor fears.
In Europe, Paris yielded 0.76%, Frankfurt 0.45% and Milan 0.52% around 7:15 a.m. (Eastern time).
London fell 1.05% after reporting a 0.2% rise in UK gross domestic product (GDP) in the second quarter compared to the first, driven by manufacturing activity and lower commodity prices. materials, or by the hotel and catering industry.
This statistic confirms expectations of another rate hike by the British central bank (BoE) in September, which weighs on equities, but pushes the pound sterling up (0.25% to 0.8641 pounds per euro) and UK government bond interest rates (4.47% for 10-year debt, vs. 4.36% the previous day) around 7:10 a.m. EST.
Wall Street is heading toward an open close to breakeven, according to futures for all three major indices.
At 8:30 a.m. EST, investors will see U.S. producer prices for July.
On Thursday, the consumer price index, the main measure of inflation, came out a little below analysts’ forecasts.
But the markets are not completely relieved of their fears about a possible new rise in the key rates of the American central bank, the Fed.
San Francisco Fed President Mary Daly told Yahoo! Finances that “it is not a single number that declares” the “victory” of the Fed on inflation. “There is still work to do. And the Fed is fully committed to resolutely bringing inflation back to its 2% target,” she said.
Around 7:10 a.m. EST, the dollar was down 0.12% against the euro, at $1.0994 to the euro. Interest rates on European sovereign debt were rising on the bond market, with that of the 10-year German government bond standing at 2.59%, against 2.53% at the close the previous day.
In China, investors, who have been worried for several months about the strength of the economy, now fear the consequences of the real estate crisis.
The Shanghai Stock Exchange lost 2.01% and Hong Kong 0.90%.
“Chinese local governments are highly indebted and […] the real estate crisis is causing their debt-to-income ratio to skyrocket,” says Swissquote Bank analyst Ipek Ozkardeskaya, who further reports that China’s largest real estate developer, Country Garden (- 5.77% in Hong Kong), could post a huge loss in its half-year results.
Year-to-date, its stock has fallen 63%.
Swiss banking giant UBS (4.20% in Zurich) has withdrawn from state and central bank support measures intended to facilitate the takeover of Credit Suisse, saying they are no longer necessary.
The Nationalist government of Giorgia Meloni joined forces with US investment fund KKR on Thursday for a joint bid to buy the landline network of incumbent Telecom Italia (TIM).
The Ministry of the Economy intends to take a share of “up to 20%” in the future company of TIM (0.07% in Milan) combining its fixed network and its subsidiary of submarine cables, announced the government in a statement.
Oil prices were hesitant on which direction to take on Friday, between the IEA’s upward revision to crude demand growth forecasts and rising U.S. inflation that could set the stage for a another Fed rate hike.
A barrel of Brent North Sea, for October delivery, rose 0.42% to $86.76 and that of West Texas Intermediate (WTI) rose 0.31% to $83.07.
The Dutch TTF futures contract, considered the European benchmark for natural gas, stabilized at 36.86 euros per megawatt hour (MWh).
