European markets: Inflation, rates, growth concerns

LONDON – European markets fell back on Friday, following their US and Asian counterparts, as global stocks start the fourth quarter on the right foot.

The pan-european Stoxx 600 It fell 0.9% in early trading, and banks lost 1.9% to lead losses as nearly all sectors and major exchanges slid into negative territory. Public services were a green sector, rising 0.7%. The European blue chip index ended September 3.4% lower, ending a seven-month winning streak.

Stocks in Asia-Pacific also suffered during Friday’s trade, with Japan’s Nikkei 225 falling more than 2.5% to lead losses. The mainland China and Hong Kong markets were closed for public holidays.

In the United States, US futures were targeting initial losses on Wall Street in early pre-trade trading after the S&P 500 suffered its worst month since March 2020.

Global markets have been rocked by fears of persistent high inflation, slowing growth and rising rates.

All eyes will be on the inflation figures to be released later in the day.

The preliminary estimate of inflation for the Eurozone is due at 10am London time. Meanwhile, in the US, the price index for core personal consumption expenditures, the Federal Reserve’s preferred policy metric, is expected to rise 0.2% in August and 3.5% annual.

Euro zone finance ministers will meet on Monday to discuss the economic consequences of rising energy prices, amid concerns that they could affect the bloc’s recovery and disproportionately affect the poorest.

In Germany, the conservative bloc CDU-CSU is set to hold coalition talks with the liberal Free Democrats (FDP) on Sunday, Reuters reported Thursday citing CDU-CSU sources. The conservative bloc narrowly lost to the center-left Social Democratic Party (SDP) in federal elections last weekend, but both sides are seeking alliances with other parties in hopes of forming a coalition government.

On the data front, German retail sales rose 1.1% month-on-month in August, official figures revealed on Friday, slightly below the Reuters consensus forecast of 1.5%.

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In corporate news, BMW it raised its annual profit forecast in an ad hoc statement Thursday to between 9.5% and 10.5%, from 7% to 9%. The German automaker said the higher prices outweighed the effects of the global semiconductor shortage and other supply chain problems.

British pub chain JD wet bucket reported earnings on Friday morning, while Daimler and Swiss credit both held extraordinary general meetings.

In terms of individual stock price movement, the British sportswear retailer JD Sports It fell 4.4% to the bottom of the Stoxx 600 after the UK competition regulator launched an investigation into the company and Leicester City Football Club.

At the top of the index, French utility EDF It rose 3.7% after French Prime Minister Jean Castex said Thursday that the February electricity price increase would be capped at 4%.

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