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European shares open lower on closely watched US inflation news


European stocks fell to lower levels on Wednesday, while the euro remained at the top of parity with the dollar, as traders awaited a closely watched US inflation report to come. announced at the end of the day.

The regional Stoxx Europe 600 share index – which has fallen nearly 15% so far this year in a global stock downturn as major central banks raise interest rates – lost 0.6% in early trades. head. London’s FTSE 100 fell 0.9%.

The broad FTSE index of Asia Pacific shares, excluding Japan, was up 0.6%. Tokyo’s Topix rose 0.5%.

US inflation data, due out on Wednesday, is expected to show the world’s largest economy’s annual consumer price growth rate rose to a 40-year high of 8.8 % last month.

Surprisingly high inflation in May prompted the Federal Reserve to raise its main funds rate by a huge 0.75 percentage points in June, the highest level in three decades.

“Any further surprises today could have a big impact,” Jim Reid, strategist at Deutsche Bank, said in a note to customers, adding that the bank’s own economists believe the annual inflation rate has hit 9%.

However, economists at Goldman Sachs expect the core monthly inflation rate, which excludes fuel and food costs, to fall to 0.5%, from 0.6% in May. Retailers may have slashed prices to move backlogs and inflation in the rental market has eased, according to the bank.

The euro remained above $1 on Wednesday, having been pushed lower in part due to concerns about Russia cutting off gas supplies to Europe. The dollar index, which measures the US currency against six others, was steady at about two-decade highs, boosted by warnings of a global recession and Fed rate hikes.

The US central bank’s benchmark interest rate is currently in the 1.5-1.75% range and the futures market is pricing in a further 0.75% increase in July. However, Optimistic production and consumer survey has prompted traders to scale down their expectations of how far the rate will rise in the coming months, with futures implying a peak of just over 3.4% next February.

In the bond market, the yield on the benchmark U.S. Treasury note jumped 0.01% higher to 2.97%. This yield, which sets the tone for the cost of debt worldwide, has fallen from about 3.5% a month ago as economic uncertainty has pushed up haven asset prices.

The two-year Treasury yield, which tracks interest rate expectations, added 0.02 percentage points to 3.07%, reflecting the so-called inverted yield curve pattern that predated the recessions. before. The spread between the two yields is the largest since 2007.

Brent crude, the international oil benchmark, rose 1.1% to $100.59 a barrel. Oil prices fell on Tuesday as threats of a new coronavirus lockdown in China further clouded the oil demand outlook, despite Western sanctions on major Russian producer following the invasion of Ukraine. .



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