Lagarde and Powell will be in focus later in the day
Wall Street stocks erased early gains to suffer solid losses overnight as investors digested disappointing economic data out of the United States. The consumer confidence index fell this month to 98.7, down from 103.2 while 12-month inflation expectations climbed to the highest level in data going back to 1987, fueling recession concerns. As such, the Dow Jones Industrial Average fell 1.56%, the S&P 500 dropped 2.01%, and the Nasdaq Composite was down 3%.
Asian equities were down on Wednesday as worries about the economy persisted. China’s Shanghai Composite shed 1.40%, Hong Kong’s Hang Seng gave up 2.04% and he Nikkei 225 in Tokyo fell 0.91% despite the release of the higher-than-expected Japan’s retail sales data. The figure climbed to 8.5%, exceeding the forecasts of 1.3% and the prior print of 4%. Meanwhile, Bank of Japan Governor Kuroda once again urged the need for an accommodative policy in Japan.
In Europe, equities opened lower to start the day as investors continued to monitor economic developments. The pan-European Stoxx 600 dropped 0.6% in early trade, with oil and gas stocks bucking the downward trend despite a retreat in oil prices after four days of strong gains. Later in the day, Federal Reserve Chairman Jerome Powell and ECB President Christine Lagarde are due to speak at the European Central Bank’s forum in Sintra.
The dollar retains a bullish bias after yesterday’s rally that pushed the USD index back above the 104.00 mark. The greenback extended the ascent towards the 104.60, a break above which would pave the way towards the 105.00 figure. The US currency refrained from a deeper retreat in recent correction from local highs, and there seems little reason to expect much of a dollar sell-off in the near term.