New York (AFP) - Stock markets retreated on Thursday as investors continued to fret over red-hot inflation and the prospect of more interest rate increases, which are fueling rising recession risks.
Wall Street's three main indices spent part of the morning in positive territory, but the rally fizzled, gaining little comfort from President Joe Biden's announcement of a tentative deal to avert a potentially damaging railroad strike.
The broad-based S&P 500 fell 1.1 percent and London dipped less than a tenth of a percent, but both Frankfurt and Paris fell further.
"The markets remain skittish following recent hot inflation readings that led to a sharp selloff on Tuesday," analysts at US firm Schwab said in a note.
That data showed US annual consumer price inflation slowed in August, but the monthly pace increased amid rising costs of food, housing and medical care.
That sparked a rout on equities as it stoked concern of more hefty Federal Reserve interest rate hikes.While higher borrowing costs help to cool inflation, they can also put a brake on economic growth.
The World Bank warned that with central banks worldwide tightening policy, the risk of a global recession has increased.
The troubling US inflation reading solidified the view the Fed will raise the benchmark lending rate by 0.75 percentage point next week; some analysts are floating the possibility of an even more aggressive step.
Global consumer prices have soared this year following Russia's invasion of Ukraine -- which has hiked energy and food costs -- and because of supply chain strains worsened by Covid lockdowns in China.
A raft of other US economic data Thursday did not help shares.
US retail sales posted a surprise increase in August in the latest illustration of the resiliency of American consumers.However, the report also downgraded sales in the prior month, tempering the good news.
And while weekly jobless claims retreated once again, US industrial production fell modestly in August.
"This market is coming down, despite a few rallies in between," said Adam Sarhan of 50 Park Investments.
"There's a lack of bullish news that can help the market," he told AFP, and "no data that suggests the Fed will change its course."
Oil, yen tumble
Forex.com analyst Fawad Razaqzada said in this economic environment investors are finding it difficult to hold onto stocks which pay low dividends and are taking profits when they can.
Eventually, though, equities will "price in" or reflect the expectations of interest rate hikes, but "until this happens, it is unlikely that the stock market will be able to shine very brightly," Razaqzada said.
Asian bourses mostly logged cautious gains Thursday, but Shanghai and Seoul dipped.
The yen was under pressure as weak Japanese data further fueled speculation of possible intervention from the Bank of Japan to support the unit.
Crude prices tumbled following a warning from the International Energy Agency that growth in demand could halt in the final months of this year.
Key figures at around 2100 GMT
New York - Dow: DOWN 0.6 percent to 30,961.82 points (close)
New York - S&P 500: DOWN 1.1 percent to 3,901.35 (close)
New York - Nasdaq: DOWN 1.4 percent to 11,552.36 (close)
EURO STOXX 50: DOWN 0.7 percent at 3,541.79 (close)
London - FTSE 100: DOWN less than 0.1 percent at 7,274.08 (close)
Frankfurt - DAX: DOWN 0.7 percent at 12,937.69 (close)
Paris - CAC 40: DOWN 1.2 percent at 6,147.37 (close)
Tokyo - Nikkei 225: UP 0.2 percent at 27,875.91 (close)
Hong Kong - Hang Seng Index: UP 0.4 percent at 18,930.38 (close)
Shanghai - Composite: DOWN 1.2 percent at 3,199.92 (close)
Dollar/yen: UP at 143.45 yen from 143.08 yen late Wednesday
Euro/dollar: UP at $0.9997 from $0.9981
Pound/dollar: DOWN at $1.1472 from $1.1539
Euro/pound: UP at 87.14 pence from 86.49 pence
Brent North Sea crude: DOWN 3.5 percent at $90.84 per barrel
West Texas Intermediate: DOWN 3.8 percent to $85.10 per barrel
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