European Markets Turn Lower After Elevated U.S. Inflation Data

Bridgette Randall
13 Sep, 2022
Frankfurt

Benchmark indexes in Europe plunged after U.S. consumer inflation was higher than expected and dented the hopes of less aggressive rate hikes. 

Consumer prices in August rose at a slower pace of 8.3% in August following a rise of 8.5% in July, the Bureau of Labor Statistics said Tuesday. 

Consumer prices in August advanced 0.1% from July when prices were flat from the previous month.  

Consumer prices increased at a slower pace annually in August but still remained elevated and significantly above the 2% target set by the Federal Reserve.

Benchmark indexes have been rallying for a week on the hopes that cooling inflation may discourage the Fed from lifting rates by another large amount. 

However, the latest elevated inflation report only strengthened the case for lifting key lending rates again by 75 basis points at the next Fed's meeting later this month. 

The S&P 500 index dropped 3.1% to 3,984.09 and the Nasdaq Composite index plunged 4.1% to 11,722.61. 

 

European Markets Plunge After U.S. Inflation Data 

The DAX index plunged 1.4% to 13,211.26, the CAC-40 index declined 1.2% to 6,257.31, and the FTSE 100 index dropped 1.1% to 7,391.47. 

The euro edged down to $1.0003 and the British pound traded down to $1.1519. 

Brent crude oil declined $1.90 to $92.08 a barrel and TTF natural gas price gained 6% to 202.55 euros a megawatt hour. 

The bond yields rose following the U.S. inflation report. 

The yield on 10-year bonds issued by Germany rose to 1.72%, U.K. advanced to 3.17%, France gained to 2.29% and Switzerland to 1.08%.

 

UK Jobless Rate Drops to 48-Year Low 

The latest jobs market data released by the Office for National Statistics offered mixed views but supported the case for higher rates by the Bank of England. 

Jobless rate in the U.K. held steady at 3.9% in August, the number of people claiming jobless benefits rose 6,300 contrary to the expectation of a decline of 13,000, according to the data released by the Office for National Statistics. 

Unemployment rate declined to 3.6% in three months to July, the lowest since the similar three-month period in 1974. 

In August, employees on payrolls increased 71,000 from July to a record 29.7 million.

 

Italy's Jobless Rate Eases to 8.0% 

Italy's seasonally adjusted jobless rate eased to 8.0% in the second quarter ending in June from 8.8% in the first quarter ending in March, Italy's statistics office Istat reported Tuesday.     

Jobless rate in the similar period a year ago was 9.6%. 

Total employment rate increased to 60.5% in the second quarter from 59.1% in the first quarter  and the inactivity rate among the 15 to 64 age group declined to 34.2% from 35.1% in the previous quarter. 

 

Spain's Inflation Eases but Stays Near Record High 

Spain's inflation eased less than the previous estimate in August. 

Consumer prices rose 10.5% in August from a 4-decade record of 10.8% in July, the Spain's statistics office INE reported Tuesday. 

The inflation rate was previously estimated at 10.4% on August 30. 

Core inflation, excluding non-processed food and energy, increased to 6.4% from 6.1% in July, record high since January 1993. 

Housing costs soared 24.8% from a year ago, and prices of food and non-alcoholic beverages rose 13.8%.