Stubborn inflation puts pressure on US and global markets

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NEW YORK (AP) – Wall Street pointed to another down day as markets open on Thursday after revealing more evidence of persistent inflation in Asia and Europe that is already driving sales.

S&P 500 futures were 0.5% lower and Dow industries lost 0.3% on the day after the US government report showed inflation near its highest level in four decades.

According to the U.S. Department of Labor, inflation slowed a touch in April to 8.3% from 8.5% in March. Price:% p.

Economists expect US data to be released on Thursday to reveal that the costs of goods before they reach consumers, called producer prices, will continue to rise. These costs can be passed on to consumers as companies have to bear the higher costs.

Also on Thursday, Britain said its economy grew at the slowest in a year in the first quarter as retailers and manufacturers struggled with supply cuts and higher prices. This raises fears that the country could fall into recession.

Gross domestic product, the broadest measure of economic activity, rose 0.8% this period, slowing from 1.3% in the previous quarter, the Office for National Statistics said on Thursday. Retail sales figures show British consumers are already cutting back on spending. Economists predict the UK will see the biggest drop in living standards this year in more than six decades.

The British FTSE 100 tumbled 2% in midday trading, the German DAX 1.8% and the CAC 40 in Paris 2.1%.

In Asia, Chinese leaders’ pledges of greater support to the slowing economy had little effect.

Hong Kong’s benchmark fell 2.2% to 19,380.34 after several prominent democracy advocates were arrested, including a retired Roman Catholic cardinal.

The arrests of Cardinal Joseph Zen, singer Denise Ho, and others followed last weekend’s election of a strict CEO for the semi-autonomous region of China, which Beijing tightened controls after taking control of the former British colony in 1997.

In other Asian trades, Tokyo’s Nikkei 225 index fell 1.8% to 25,748.72.

The Shanghai Composite Index fell 0.1 percent to 3,054.99. Australia’s S&P/ASX 200 index fell 1.8% to 6,941.00. In South Korea, Kospi fell 1.6% to 2,550.08.

Economists said the US inflation report will keep the Fed on track for rapid and potentially sharp increases in interest rates in the coming months.

To curb high inflation, the Fed has already pulled the record low short-term interest rate near zero, where most of the pandemic has passed. He also said he could continue to raise rates up to double the normal amount at upcoming meetings.

Such moves are designed to slow the economy to help curb inflation, but risk causing a recession if the Fed raises rates too high or too quickly. Higher rates tend to lower stock prices and any investment in the meantime. For example, higher-yielding, secure Treasury bills are becoming more attractive to investors.

Higher rates make big tech companies, other fast-growing stocks and even cryptocurrencies relatively less attractive.

Bitcoin continued its decline, dropping to $25,000 at one point on Thursday, dragging a number of other digital currencies with it. Bitcoin has lost 28% of its value in the last week alone and is down 60% from highs near $70,000 late last year.

In other trades, reference US oil fell $1.26 per barrel to $104.45 in electronic trading on the New York Mercantile Exchange. It gained 6% on Wednesday.

Brent crude, the international pricing standard, fell from $1.41 to $106.10 a barrel. It rose 4.9% the previous day.

The dollar fell from 129.95 yen to 128.58 Japanese yen. The euro fell from $1.0517 to $1.0408.

Copyright © 2022 The Washington Times, LLC.



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