World stocks and oil prices fell on Wednesday as UK inflation – which hit its highest level since 1982 – and rising interest rates in New Zealand reminded investors of the challenges ahead. facing the world economy.
* MSCI’s benchmark index for global stocks was off its opening highs and was trading nearly flat at 1055 GMT, signaling that the rebound that started in July is running out of steam.
* European stocks fell 0.3%, while MSCI’s index of Asia-Pacific stocks excluding Japan added 0.1%, far from their opening highs.
* Wall Street appeared to be headed off to a weak start, with S&P 500 futures down 0.7% after strong gains on Tuesday following better-than-expected results from Walmart and Home Depot, which reinforced optimistic views on the consumer health.
* However, a larger-than-expected increase in UK consumer prices, to 10.1% in July, highlighted the mounting pressures on households and helped to consolidate expectations of a further rise in interest rates. 50 basis points at the next Bank of England meeting.
* After an initial rally on the data, sterling trimmed some gains and traded little changed against the dollar.
* Two-year UK bond yields, which are sensitive to expectations of rate hikes, rose to their highest level in almost 14 years and above 10-year yields, marking a reversal of the yield curve that many investors say is a harbinger of a major economic slowdown.
* New Zealand shares closed flat. After an initial rally, the New Zealand dollar turned into negative territory after the local central bank announced a fourth consecutive interest rate hike of 50 basis points, showing no signs of slowing down.
* In currency markets, the dollar index was up 0.1% at 106.59 ahead of the release of the latest Federal Reserve meeting minutes, which investors will examine for more clues about its future. prospects for tightening monetary policy.
* In Europe, yields rose as UK inflation data refocused investors’ attention on possible monetary tightening in the euro zone. Two-year German bond yields rose 13 basis points to 0.714%, their highest since July 21.
* The yield on US 10-year Treasury bonds rose 4 basis points to 2.865%.
* Oil hit a six-month low after briefly rallying as concerns about the prospect of a global recession overshadowed a report showing a drawdown in US crude and gasoline stocks.
* Brent crude fell 0.4% to $92 a barrel, while US West Texas Intermediate crude fell 0.1% to $86.4.
* Spot gold traded in a narrow range and was down 0.3% at $1,771 an ounce.