HONG KONG (AFP) – Stocks slipped yesterday as investors await key United States (US) jobs data while girding themselves for a corporate earnings season many fear will highlight the impact of surging inflation and interest rates.
A report showing prices rose in the eurozone at a record pace last month added to concerns that central bank tightening has a long way to go, while Federal Reserve vice-chair Lael Brainard said US officials would not pull back too early.
Banks’ battle against inflation could also be made harder – particularly in Europe – as reports said OPEC and other oil producers are considering a major output cut owing to a plunge in prices caused by demand worries.
Crude prices jumped more than four per cent in Asian trade ahead of the possible cut.
Sterling enjoyed a brief rally above USD1.12 – having hit a record low USD1.0350 last Monday – after United Kingdom (UK) Finance Minister Kwasi Kwarteng made a major U-turn by saying he had scrapped controversial plans to axe the top income tax rate.
The cut was part of a controversial mini-budget unveiled by Kwarteng last Monday, which sent markets spinning.
Kwarteng’s announcement came as the ruling Conservatives hold their annual conference with new Prime Minister Liz Truss facing growing anger within the party.
The pound briefly hit a high of USD1.1281 before easing back again.
All three main indexes on Wall Street ended down on Friday, registering a third straight quarter of losses for the first time since the global financial crisis in 2009.
The release of US jobs data on Friday will be closely watched, with a strong reading likely to give the Fed more ammunition to unveil a fourth successive bumper rate hike at its November meeting.
Asian equity markets fell at the start of the week. Hong Kong fell, having at one point dropped below 17,000 for the first time since 2011, while Sydney, Mumbai, Bangkok, Singapore, Taipei, Jakarta and Wellington were also in the red.
Tokyo rose, however, even as the Bank of Japan’s Tankan survey showed confidence fell among the country’s largest manufacturers for the third straight quarter. Manila also rose.
London, Paris and Frankfurt all tumbled in the morning. With inflation remaining elevated, there is little prospect that the pain will ease any time soon.