Wall Street poised for losses as more data highlights global woes

LONDON, Aug 19 (Reuters) – European stocks fell on Friday and German government bond yields hit multi-week highs after German producer prices surged to their biggest ever rise.

Asian stocks had struggled to find direction as worries about China’s faltering growth weighed on sentiment. Earlier this week, China unexpectedly cut policy rates in a bid to boost demand after data showed the economy unexpectedly slowed in July amid zero COVID policy and a housing crisis. . Read more

European stocks opened in the red and sentiment was further hit by data showing that German producer prices – a leading indicator of inflation – saw their biggest gains on record in July, as Energy costs continued to rise. Energy prices increased by 105% compared to July 2021, mainly due to higher natural gas and electricity prices.

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Natural gas prices hit a record close on Thursday.

Germany’s finance ministry said on Friday that the economic outlook for Europe’s biggest economy was bleak. Read more

Meanwhile, UK consumer confidence hit its lowest level since at least 1974 in August as households felt “a sense of exasperation” at the rising cost of living. Read more

UK retail sales data for July was higher than expected, driven by an increase in online spending, but volumes are expected to resume their decline as costs rise. Read more

The Bank of England has warned that high inflation could tip Britain into recession later this year.

“The three main economic engines of the world – the United States, Europe and China – are collapsing,” Berenberg economists wrote in a note to clients.

“As China struggles with its unsustainable zero COVID-19 policy and a host of internal financial imbalances, a tsunami of inflation is hitting the United States and Europe.”

“Consumers in the Western world have rarely been more pessimistic.”

As of 10:40 GMT, the MSCI World Stock Index (.MIWD00000PUS), which tracks stocks from 47 countries, was down 0.3%. Read more

The European STOXX 600 fell 0.4%, on track for a weekly decline of 0.4% as well (.STOXX).

German bond yields rose, with the 10-year yield hitting a one-month high of 1.202%, as producer price data was seen to reinforce fears of “stagflation” – a combination of high inflation and low growth.

Wall Street was expected to open lower, with S&P 500 futures down 1% and Nasdaq futures down 1.2%.

“As market participants begin to return from their holidays and look back on the past days and weeks, they will find that central banks are still far from meeting their inflation-control targets,” the strategists said. ING rates in a note to clients.

“It means an ongoing struggle between expectations of central bank tightening and fears of recession.”

The threat of higher borrowing costs also hung in the markets after four US Federal Reserve officials signaled that there was still work to be done on interest rates. Read more

The US dollar benefited from hawkish comments from the Fed and cautious investors, hitting a one-month high. The dollar index rose 0.4% to 107.9 and the euro fell 0.3% to $1.0061.

The 10-year US Treasury yield climbed near a one-month high of 2.9335%.

Oil prices fell after two days of gains, forecast for a weekly decline as traders worried about a slowdown in global demand. Read more

Bitcoin fell sharply and hit a three-week low of $21,404. Read more

Next week, investors will pay close attention to the minutes of the July meeting of European central banks, as well as comments from US Federal Reserve Chairman Jerome Powell when he addresses the annual conference. of the world’s central banks in Jackson Hole on August 26. LINK

China is expected to cut its benchmark lending rates significantly on Monday, according to a Reuters survey, with a large majority of respondents expecting a bigger cut in the mortgage benchmark to prop up the struggling real estate sector. Read more

UK and Eurozone “flash” PMI data is due on August 23rd.

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Reporting by Elizabeth Howcroft; Editing by Jacqueline Wong and Kim Coghill

Our standards: The Thomson Reuters Trust Principles.

Elizabeth Howcroft

Thomson Reuters

Reports on the intersection of finance and technology, including cryptocurrencies, NFTs, virtual worlds and money that generates “Web3”.

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