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Brunei
Monday, September 26, 2022
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Monday, September 26, 2022
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    European stocks drop, oil steadies

    LONDON (AFP) – European stock markets fell yesterday as official data showed inflation in the United Kingdom (UK) surging to a new 40-year high.

    Meanwhile Wall Street stocks opened lower as traders awaited minutes from the Fed’s July meeting for insight into the size of the United States (US) central bank’s next rate hike.

    Investors remain on edge as central banks hike interest rates to fight runaway inflation, but which threatens to tip economies into recession.

    Oil prices steadied after recent heavy falls caused by forecasts of weaker demand on slowing economic growth.

    The possibility of an Iran nuclear deal that would boost supplies has also weighed on crude prices.

    In foreign exchange, the pound firmed against the dollar as official data showed UK inflation soaring above 10 per cent, but then fell back.

    The acceleration in inflation increased expectations of a further sharp rise to the Bank of England’s main interest rate, said economists. “Markets reacted negatively to the (inflation) news with the (London) FTSE and other European indices falling,” noted City Index analyst Fawad Razaqzada.

    The New York Stock Exchange. PHOTO: AP

    Shares in heavily indebted cinema chain Cineworld plunged more than 50 per cent to as low as 9.5 pence in London after the group warned over weaker-than-expected ticket sales.

    Hit hard by pandemic lockdowns in Britain and the US, Cineworld said it had been further hit since reopenings by a “limited” number of film releases.

    Wall Street stocks opened lower as traders waited minutes from the Fed’s July meeting for insight into the size of the US central bank’s next rate hike.

    “We expect the… minutes to have a hawkish tilt,” said Carol Kong at Commonwealth Bank of Australia. “We would not be surprised if the minutes show (officials) considered a 100 basis points increase in July.”

    The bank lifted rates by 75 points in both June and July.

    While the Federal Reserve and its peers are expected to keep tightening monetary policy for the rest of the year, talk is building that they will be able to ease up in 2023 should inflation cool as expected by markets.

    Investors also pored over data that showed US retail sales held steady in July as gas prices fell and spending on automobiles dropped sharply, instead of rising slightly as expected by most experts.

    Sales increased 0.7 per cent when gasoline and motor vehicles are excluded from the calculation, the Commerce Department said, however.

    In Asia yesterday, major stock markets gained following a positive overnight lead from Wall Street and hopes of Chinese stimulus.

    China’s central bank on Monday announced a surprise interest rate cut, preceding a report that said Chinese Premier Li Keqiang had called on six key provinces – accounting for about 40 per cent of the economy – to bolster pro-growth policies.

    Chinese tech giant Tencent yesterday posted its first drop in quarterly revenue since going public, as the company grapples with China’s economic downturn, pandemic disruptions and ongoing scrutiny from regulators.

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