The US rate of inflation has hit 2.6% in the 12 months to March, the highest level seen since 2008
Wall Street indexes fell dramatically overnight as risk aversion intensified following unexpectedly strong US inflation data. The US rate of inflation has hit 2.6% in the 12 months to March, the highest level seen since 2008. On a monthly basis, the consumer price index soared 0.8% to match the biggest monthly increase since 2009. Against this backdrop, market players expressed worries about surging inflation that might prompt the Federal Reserve to withdraw stimulus earlier than expected. As a result, the S&P 500 lost 2.14%, the Dow Jones Industrial Average lost 2%, and the Nasdaq gave up 2.7% in its largest pullback since March.
Asian stock markets followed Wall Street lower for a second day on Thursday amid growing worries inflation might drag on the economic recovery. The Shanghai Composite Index fell 1.26% and the Nikkei 225 in Tokyo tumbled 2.4%. The Hang Seng in Hong Kong lost 1.54%. The Kospi in Seoul sank 1.33% and Sydney’s S&P/ASX 200 was 0.94% lower.
In Europe, equities opened lower as well, digesting the latest inflation data, with U.S. stock futures indicating more selling was ahead. The Stoxx Europe 600 index slid 1.62% in early trade despite the Fed has said previously that it would tolerate inflation that rises above its 2% target. In individual stocks, Burberry slumped over 8% despite the retailer said its operating profit more than doubled in fiscal 2021.
Meanwhile, the dollar surged across the board amid higher-than-expected US CPI data. EURUSD plunged from the 1.2150 area but managed to hold above the 20-DMA that acted as support early on Thursday as well. In recent trading, the euro failed to regain the 1.2100 figure and turned lower again, threatening the mentioned moving average that could turn into resistance if the US PPI report comes in higher than expected later today.
