Following a mixed day in Asia on Tuesday, shares began lower in Europe as investors awaited news on inflation and the mood of American consumers towards the economy.
Ahead of Chancellor Olaf Scholz’s speech to parliament, where he will outline his and his divided government coalition’s plans to strengthen the flagging economy and navigate a fiscal crisis, Germany’s DAX fell 0.1% to 15,946.07.
Britain’s FTSE 100 fell 0.4% to 7,430.26, while the Paris CAC 40 lost 0.5% to 7,229.88. The Dow Jones Industrial Average and S&P 500 futures were both down 0.1%.
Tuesday was the Conference Board’s deadline for providing an update on the year-over-year stability of consumer confidence. According to a FactSet survey of economists, they anticipate another strong showing for the October report.
Wall Street will be eagerly observing the government’s October statistics on the preferred inflation metric used by the Federal Reserve on Thursday. Since the middle of 2022, the measure has been easing, and economists predict it to continue doing so.
Investors are becoming cautiously confident that the Federal Reserve will finally cease its aggressive rate rise programme since inflation has decreased enough. In the meantime, the overall economy has managed to stave off a recession despite growing prices and interest rates.
Analysts noted that signs of a faltering U.S. economy and unclear conditions in China are dampening investor confidence.
Robert Carnell and Min Joo Kang of ING Economics said in a statement that “the Conference Board’s consumer confidence survey could well show a deterioration in mood” following the more than anticipated slowdown in U.S. new home sales in October.
Tokyo’s Nikkei 225 index fell 0.1% to 33,408.39 during Asian trade.
Hong Kong’s Hang Seng fell 1% to 17,354.14. SenseTime, a Chinese artificial intelligence software business, had a 4.9% decline in its shares after Grizzly Research accused the company of misrepresenting its revenue data. Sensetime stated in a notification to the Hong Kong Stock Exchange that the accusations were “without merit.”
Grizzly has also targeted other Chinese IT firms, including as Temu, an online clothes store.
In other news, the Shanghai Composite index increased by 0.2% to 3,038.55 while the Kospi in South Korea increased by 1.1% to 2,521.76.
India’s Sensex remained unchanged at 65,969.29, while Australia’s S&P/ASX 200 gained 0.4% to 7,015.20. Bangkok’s SET increased by 0.7%.
Both the Dow industrials and the S&P 500 had 0.2% declines on Monday. The Nasdaq Composite fell by one percent. It’s still expected that the S&P 500 will end November as its best month of the year.
Treasury yields saw a significant decline in the bond market. Late on Friday, the yield on the 10-year Treasury dropped from 4.47% to 4.38%, which affects interest rates on loans and mortgages.
Early on Tuesday, electronic trading on the New York Mercantile Exchange saw U.S. benchmark crude up 18 cents at $75.04 a barrel.
The benchmark for international pricing, Brent crude, increased by 23 cents to $80.10 a barrel.
Before Thursday’s meeting of OPEC, the price of U.S. crude oil declined by 0.9% on Monday, almost staying unchanged. Although prices have been declining over the past month, the cartel has continued to maintain tight supply. Reduced energy costs might encourage corporate growth and lessen the impact of inflation on consumers.
Up until the end of the year, the Fed and its future actions will remain the major focus. Its benchmark interest rate has not changed from its previous quarter-point raise at its July meeting, remaining between 5.25% and 5.50%. Investors anticipate a rate reduction from the Fed in the middle of 2024, easing off of its highest point in the previous 20 years. The goal of the central bank is to contain inflation without severely impeding economic expansion or triggering a recession.