Markets steady after worst day for US stocks since June 2020
CNN
By Michelle Toh and Julia Horowitz, CNN Business
Markets steadied early Wednesday after US stocks logged their worst day since June 2020, plunging on news that inflation in August was higher than expected.
Shares in Europe were mixed. Germany’s DAX dropped 0.2% in early trading, while France’s CAC 40 was flat. The FTSE 100 in London was 0.7% lower, while Italy’s benchmark index rose 0.7%.
US stock futures were slightly higher.
“Equity futures suggest that the rout stops here,” Robert Carnell, regional head of Asia-Pacific research at ING, wrote in a report Wednesday.
US stocks tanked on Tuesday, logging their worst day since June 11, 2020, after August inflation data surprised investors. The US Consumer Price Index, which covers key goods and services, rose 0.1% from July, versus economists’ projections of a 0.1% drop.
Annual inflation eased for the second straight month but also remained stubbornly high, with prices up 8.3% year-on-year.
The Dow was down 3.9%. The S&P 500 fell 4.3%, while the Nasdaq Composite plunged 5.2%.
Investors were anxious that hotter-than-expected inflation could prompt the US Federal Reserve to raise interest rates more aggressively, inflicting serious damage to the country’s economy in the process.
The lackluster US inflation data caught markets in Asia “completely off guard” as well, Carnell wrote, noting that US core inflation — which strips out the more volatile categories like food and gas — had reached 6.3% in August.
The month-on-month gain of 0.6% was double what economists had expected.
Japan’s Nikkei 225 slid 2.8% on Wednesday, while South Korea’s Kospi lost 1.6%.
Chinese markets declined, too, with the benchmark Shanghai Composite (SHCOMP) Index down 0.8%. Hong Kong’s Hang Seng fell 2.5%.
Consumers in the world’s largest economy have been struggling to adjust to rising prices, with cutbacks made on virtually everything from food to school supplies.
The annual rate of inflation in the United Kingdom also dipped in August to 9.9% thanks to falling gasoline prices, but rose by 0.5% on the previous month. And stripping out energy and food costs, annual UK CPI edged up to 6.3%.
— Nicole Goodkind, Alicia Wallace and Laura He contributed to this report.
The-CNN-Wire
™ & © 2022 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.
