Global Markets Steady Ahead of US Inflation Data -- 3rd Update

Global stocks were mostly lower Thursday ahead of U.S. inflation data and the Bank of England's decision on interest rates.

Disappointing economic data in China hit bourses across Asia, as retail sales, industrial production and fixed-asset investment in the world's second biggest economy all slowed last month.

The Stoxx Europe 600 edged down 0.1% in morning trade, led by losses in mining stocks. In Asia, most markets fell, paring recent gains on signs that China's economy is cooling.

Futures pointed to a flat opening for both the S&P 500 and the Dow Jones Industrial Average. Wall Street reached fresh records for a second day in a row on Wednesday.

Earlier in the week, global stocks rallied as North Korea tensions and fears over Hurricane Irma eased.

Investors continue to debate how long the equities' bull run has left. Its sheer length makes some nervous, while others argue that strong earnings and economic growth will continue to support stocks.

"You have people predicting the next Lehman crisis because the cycle has gone on for such a long time and people saying that it should carry on because the fundamentals are fine," said Paul Hatfield, global chief investment officer at Alcentra, who said he sides more with the latter view.

Lewis Grant, global equities senior portfolio manager at Hermès, said there is still room for equities to go up, but "it wouldn't be surprising to see a little bit of nervousness among investors."

The dollar was down Thursday ahead of key U.S. inflation data. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, fell 0.1%.

Investors were awaiting the U.S. Consumer Price Index, due later Thursday, a proxy for inflation that could weigh on the Federal Reserve's monetary policy decisions. Stubbornly low inflation has lowered the odds of an interest-rate increase before the end of the year. That in turn has weighed on the greenback, which this year has fallen 8% against a basket of currencies, based on the WSJ Dollar Index.

In the U.S., optimism grew over long-awaited tax reform after House Speaker Paul Ryan voiced confidence on Wednesday that the new tax system could be finished by the end of the year.

In Europe, traders were also anticipating the Bank of England's policy announcement, when it is expected to keep interest rates unchanged at 0.25% despite rising inflation. In the U.K., the FTSE 100 was flat while the British pound fell 1% against the U.S. dollar, changing hands at $1.3203.

Elsewhere in the currency market, the euro was up 2% against the dollar, while the Swiss franc weakened against the euro after Switzerland's National Bank softened its tone on the franc's strength and kept interest rates unchanged.

In the bond market, prices climbed, pushing down yields. The 10-year Treasury yield moved slightly lower Thursday to trade at 2.189% according to Tradeweb, compared with Wednesday's close of 2.194%. The 10-year German government bond yield was also off at 0.397%, from 0.405% Wednesday.

In Asia, China's tepid economic data sent key stock indexes lower, reversing early gains. Japan's Nikkei 225 ended down 0.3% and Hong Kong's Hang Seng Index was down 0.4%, while South Korea's Kospi finished up 0.7%.

"It was a surprise to us that the growth rate in fixed-asset investments came down so speedily, mostly due to the weakness in construction sector, " said ING economist Iris Pang. The latter is a direct reflection of a dip in real estate activity, likely due to Beijing's efforts to cool the overheating property market, Ms. Pang said.

That data also weighed on copper and iron ore as China is the biggest consumer of these commodities. Three-month London Metal Exchange copper futures fell 1.4% to $6,467 a metric ton, its lowest point in nearly a month.

Elsewhere in the commodities market, Brent crude gained 0.6% to trade at $55.51 a barrel and gold rose 0.1%.

Kenan Machado contributed to this article.

Global stocks were broadly flat Thursday as investors waited for U.S. inflation data.

Disappointing economic data in China hit bourses across Asia, as retail sales, industrial production and fixed-asset investment in the world's second biggest economy all slowed last month.

The Stoxx Europe 600 was flat in late morning trade, with mining stocks lower and oil companies moving higher.

Futures pointed to a flat opening for both the S&P 500 and the Dow Jones Industrial Average. Wall Street reached fresh records for a second day in a row on Wednesday.

"I think we saw a bit of a fading in the momentum we had in the U.S. and people are still looking for direction more than anything," said Paul Hatfield, global chief investment officer at Alcentra.

Earlier in the week, global stocks rallied as North Korea tensions and fears over Hurricane Irma eased.

Investors continue to debate how long the equities' bull run has left. Its sheer length makes some nervous, while others argue that strong earnings and economic growth will continue to support stocks.

"You have people predicting the next Lehman crisis because the cycle has gone on for such a long time and people saying that it should carry on because the fundamentals are fine," Mr. Hatfield said, adding he sides more with the latter view.

Lewis Grant, global equities senior portfolio manager at Hermès, said there is still room for equities to go up, but "it wouldn't be surprising to see a little bit of nervousness among investors."

The dollar was down Thursday ahead of key U.S. inflation data. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, fell 0.1%.

Investors were awaiting the U.S. Consumer Price Index, due later Thursday, a proxy for inflation that could weigh on the Federal Reserve's monetary policy decisions. Stubbornly low inflation has lowered the odds of an interest-rate increase before the end of the year. That in turn has weighed on the greenback, which this year has fallen 8% against a basket of currencies, based on the WSJ Dollar Index.

In U.K., the British pound rallied against the dollar and the euro, climbing by 0.7% and 0.6% respectively to $1.329 and EUR1.117, after the Bank of England said it would keep interest rates unchanged, but signaled that officials are preparing to raise interest rates within months to restrain accelerating inflation.

U.K. 10-year gilt yields also jumped, rising from around 1.13% before the announcement to 1.18% shortly afterward, while the export heavy FTSE 100 inched down, as the pound drifted upward.

Elsewhere in currency markets, the euro was up 1% against the dollar, while the Swiss franc weakened against the euro. Switzerland's central bank softened its tone on the franc's strength and kept interest rates unchanged.

In the bond market, prices climbed, pushing down yields. The 10-year Treasury yield moved slightly lower Thursday to trade at 2.193% according to Tradeweb, compared with Wednesday's close of 2.194%. The 10-year German government bond yield was also slightly off at 0.403%, from 0.405% Wednesday.

China's tepid economic data sent key stock indexes lower in Asia, reversing early gains. Japan's Nikkei 225 ended down 0.3% and Hong Kong's Hang Seng Index was down 0.4%, while South Korea's Kospi finished up 0.7%.

"It was a surprise to us that the growth rate in fixed-asset investments came down so speedily, mostly due to the weakness in construction sector, " said ING economist Iris Pang. The latter is a reflection of a dip in real-estate activity, likely due to Beijing's efforts to cool the overheating property market, Ms. Pang said.

That data weighed on copper and iron ore as China is the biggest consumer of these commodities. Three-month London Metal Exchange copper futures fell 1.4% to $6,461 a metric ton, its lowest point in nearly a month.

Elsewhere in the commodities market, Brent crude gained 1% to trade at $55.71 a barrel and gold was flat.

Kenan Machado contributed to this article.

(END) Dow Jones Newswires

September 14, 2017 08:18 ET (12:18 GMT)