European markets: inflation, interest rates, growth concerns

LONDON – European markets pulled back on Friday, following their US and Asian counterparts, while global stocks started fourth quarter behind.

The pan-European Stoxx 600 lost 1% in early trading, with banks dropping 1.8% to lead losses as almost all sectors and major exchanges slid into negative territory.

Stocks from the Asia-Pacific region also suffered during Friday’s trading, with the Japanese Nikkei 225 losing more than 2.5%, leading to losses. The markets in mainland China and Hong Kong were closed on public holidays.

In the States, US futures pointed to opening losses on Wall Street in early pre-trading hours after the S&P 500 suffered its worst month since March 2020.

Fears of persistently high inflation, a slowdown in growth and rising interest rates have shaken global markets.

All eyes will be on the inflation numbers due later in the day.

The Eurozone inflation forecast is due at 10 a.m. London time. Meanwhile, in the US, the core consumer spending index, the Federal Reserve’s preferred policy benchmark, is expected to rise 0.2% in August and 3.5% annually.

Eurozone finance ministers will meet on Monday to discuss the economic impact of soaring energy prices as they are concerned it could affect the bloc’s recovery and disproportionately affect the poorest.

In Germany, the conservative CDU-CSU bloc will hold coalition talks with the liberal Free Democrats (FDP) on Sunday, Reuters reported on Thursday, citing CDU-CSU sources. In last weekend’s general election, the conservative bloc narrowly lost to the center-left Social Democratic Party (SDP), but both sides are looking for alliances with other parties to form a coalition government.

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In the company news on Thursday, BMW raised its annual profit forecast from 7% to 9% to 9.5% to 10.5% in an ad hoc announcement. The German automaker said higher prices outweigh the effects of global semiconductor shortages and other supply chain problems.

British pub chain JD Wetherspoon reported profits on Friday morning while Daimler and Credit Suisse both held extraordinary general meetings.

On the data front, German retail sales rose 1.1% in August compared to the previous month, as official figures announced on Friday, slightly below a Reuters consensus forecast of 1.5%.

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