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The
U.S. consumer price index for October is predicted in a Reuters
poll of economists to come in at an annualised +4.3% on the
closely watched core measure, versus the U.S. Federal Reserve's
average annual 2% inflation target.
"We know inflation is high right now. Equity markets don't
expect it to stay too high for too long," said Seema Shah, chief
strategist at Principal Global Investors.
The mood could change if there were signs that inflation
pressures went beyond supply chain concerns, she added.
Brent and U.S. crude futures hit two-week highs around $85 a
barrel after industry data showed U.S. crude stocks unexpectedly
fell last week. They later pared gains ahead of U.S. Energy
Information Administration (EIA) oil inventory data. [O/R]
The MSCI global equity index fell 0.13% and S&P 500 futures were
down 0.3% after Wall Street closed lower on Tuesday, ending a
multi-day rally of consecutive record closing highs as the end
of a consensus-beating earnings season comes into view.
"Rising inflation doesn’t seem to sour the market mood as much
as it did a couple of months earlier, as investors are well
conscious that the Fed will continue turning a blind eye on the
problem," said Ipek Ozkardeskaya, senior analyst at Swissquote.
Shares in Tesla Inc edged higher following a two-day rout that
saw the electric-car maker shed as much as $200 billion in
market capitalisation.
The selloff was spurred by company chief Elon Musk's poll over
the weekend asking his Twitter followers if he should sell 10%
of his stake in the company. Nearly 58% said they supported a
sale.
European stocks dipped 0.18%, moving away from recent record
highs, though Britain's FTSE 100 index rose 0.45%, partly on
stronger energy stocks.
In Asia - where another inflation warning came from Chinese
factory gate prices rising at their fastest clip in a quarter
century - MSCI's broadest index of Asia-Pacific shares outside
Japan reversed earlier losses to gain 0.1%.
Cash-strapped China Evergrande Group teetered again on the
precipice of default as it faced a final deadline to make an
offshore bond coupon payment on Wednesday.
Shares in Chinese property developer Fantasia Holdings fell as
much as 50%, before recouping some losses, after a six-week
trading halt as the company warned it might not be able to meet
its debt obligations.
Oxford Economics analysts said they expected China's property
downturn to be "contained" but added that "with shifting
demographics, high numbers of empty apartments, and some big
property developers being heavily over-leveraged, China’s huge
property sector could crash more heavily".
Hong Kong stocks also recovered ground, gaining 0.74% after
earlier hitting a one-month low.
Japan's Nikkei fell 0.6%, hurt by the rising cost of raw
materials.
The dollar gained 0.31% against the safe-haven yen to 113.22
after hitting a one-month low on Tuesday, while the euro fell
0.39% to $1.1548. The dollar index was up 0.36% at 94.31.
The benchmark 10-year U.S. Treasury yield picked up 3.4 basis
points to 1.4830% after it touched a six-week low of 1.4150% on
Tuesday.
Euro zone bond yields also ticked up, with Germany's 10-year
yield, the benchmark for the bloc, up 1.1 basis points at
-0.282%, above the seven-week low of -0.299% touched on Tuesday.
[GVD/EUR]
Brent crude futures were steady at $84.76 a barrel, after rising
1.6% on Tuesday. U.S. West Texas Intermediate (WTI) crude
futures dropped 0.42% to $83.80 a barrel, following Tuesday's
2.7% gain.
Gold and Bitcoin have been the primary beneficiaries of the
market turbulence, with gold up about 3.5% in a week to $1,824
an ounce and Bitcoin at $66,643 after hitting a record of
$68,564 a day ago.
(Editing by Sam Holmes and Angus MacSwan and John Stonestreet)
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