Markets remain driven by fears that the Fed’s aggressive policy may steer the US economy into a recession
US stock indexes finished marginally lower on Wednesday as minutes from the Federal Reserve’s September meeting raised concerns that the central bank will continue to aggressively tighten monetary policy. Meanwhile, PPI slowed to 8.5% from 8.7% while the monthly core rate rose 0.4%, above forecast. The data has worsened fears that the Fed’s aggressive policy may steer the US economy into a recession. The Dow Jones Industrial Average was down 0.1%, the S&P closed down 0.33%, and the Nasdaq Composite shed less than 0.1%.
Asian equity markets followed Wall Street lower as investors were cautious ahead of the US CPI report due later in the day. Also, investors kept weighing the risks of global recession amid hawkish Fed tone. MSCI’s broadest index of Asia-Pacific shares lost 0.57%, holding around more than two-year lows registered in the previous session. Japan’s Nikkei 225 gave up 0.66% after the data showed that PPI came in hotter than anticipated at 9.7% for the month of September versus the 8.9% forecast.
In Europe, stocks opened in negative territory on Thursday as investors were nervous ahead of US inflation data. The pan-European Stoxx 600 fell 0.7% in early deals, with tech stocks leading the losses. According to the latest data, Germany’s September final CPI came in at +10.0%, in line with the preliminary estimate. Elsewhere, Germany will receive its first direct gas deliveries from France to cope with energy crisis.
Meanwhile, the US dollar has steadied above 113.00, holding onto the upper end of the trading range as risk-averse environment keeps playing into dollar’s hands. The USD index looks elevated but could extend the ascent should the US CPI exceed expectations. EURUSD has been struggling for direction for the third session in a row. The pair has settled around 0.9700, staying below the descending 20-DMA, today at 0.9800. On the downside, the nearest support arrives at 0.9670.