Global stocks mostly fell Tuesday with Wall Street failing to extend a rally and Eurozone bourses tumbled on news that the region’s inflation rate hit another record high in May.
Consumer prices in the eurozone rose by 8.1 percent in May, compared with 7.4 percent in April, official data showed, with energy surging the fastest.
The uninterrupted rise in prices in the wake of Russia’s invasion of Ukraine has heaped pressure on the European Central Bank to speed up interest rate increases, as it prepares to raise borrowing costs for the first time in over a decade.
Adding to the woes: Monday’s agreement by the European Union late Monday for a partial embargo of Russian oil imports pushed Brent oil prices, the European benchmark, worsening inflation worries.
“Higher inflation rates will raise serious question marks about the ECB’s viewpoint on whether gradual rate increases will be enough to deal with such high price growth,” market analyst Fawad Razaqzada from City Index and FOREX.com said.
“Investors are starting to project a faster pace of tightening from the ECB, which could be another factor holding stocks back.”
Bourses in Paris and Frankfurt both dropped more than one percent.
Wall Street also retreated following a lackluster session, the first in a holiday-shortened week.
US shares spent most of the day in the red as investors digested data showing consumer confidence slipped in May as Americans expressed greater unease about the job market, though they remained relatively upbeat even as high inflation bites.
The losses were a disappointment after US stocks last week finally mustered weekly gains after about a month of losses.
“US stocks declined as investors stared at an inflation wall of worry and uncertain Fed tightening path,” said Oanda’s Edward Moya. “In the US, it is too early to be confident in saying that the peak of inflation is in place.”
This week’s economic calendar includes surveys with readings on the American manufacturing and services sectors, as well as the May government jobs report.
– Brent oil tops $124 –
In reaction to the EU’s partial embargo, Brent oil briefly broke above $124 per barrel and WTI crude breached $119.
European chiefs said the latest sanctions would ban purchases of Russian oil delivered by sea, though there would be a temporary exemption for crude received by pipeline.
While widely expected, the agreement adds further upside to crude just as China begins to ease Covid restrictions in Shanghai and Beijing, raising the likelihood of a jump in demand from the world’s number-two economy.
– Key figures at around 2040 GMT –
New York – Dow: DOWN 0.7 percent at 32,990.12 (close)
New York – S&P 500: DOWN 0.6 percent at 4,132.15 (close)
New York – Nasdaq: DOWN 0.4 percent at 12,081.39 (close)
Frankfurt – DAX: DOWN 1.3 percent at 14,388.35 (close)
Paris – CAC 40: DOWN 1.4 percent at 6,468.80 (close)
London – FTSE 100: UP 0.1 percent at 7,607.66 (close)
EURO STOXX 50: DOWN 1.4 percent at 3,789.21 (close)
Tokyo – Nikkei 225: DOWN 0.3 percent at 27,279.80 (close)
Hong Kong – Hang Seng Index: UP 1.4 percent at 21,415.20 (close)
Shanghai – Composite: UP 1.2 percent at 3,186.43 (close)
Euro/dollar: DOWN at $1.0739 from $1.0779 on Monday
Pound/dollar: DOWN at $1.2603 from $1.2652
Euro/pound: DOWN at 85.18 pence from 85.20 pence
Dollar/yen: UP at 128.72yen from 127.59 yen
Brent North Sea crude: UP 1.0 percent at $122.84 per barrel
West Texas Intermediate: DOWN 0.3 percent at $114.67 per barrel
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