Global stock markets stagnate as concerns about inflation and interest rates return

 Global stock markets stagnate as concerns about inflation and interest rates return

Wall Street's benchmark S&P 500 share index fell 0.27%, while MSCI's measure of global shares was unchanged after two weeks of advances. Not much moved in the Dow Jones Industrial Index, while the Nasdaq Composite fell 0.4%.

On November 13, global equities saw cautious trading as investors shifted their attention to US inflation data to get more insight into whether or not global interest rates had really peaked.

Wall Street's benchmark S&P 500 share index fell 0.27%, while MSCI's measure of global shares was unchanged after two weeks of advances. Not much moved in the Dow Jones Industrial Index, while the Nasdaq Composite fell 0.4%.

Since predictions that major central banks have paused their long run of interest rate rises calmed a wave of risk aversion in October brought on by the commencement of the Israel-Hamas conflict, the index has risen over 5% so far this month.

Nevertheless, there are a lot of market risk events this next week, with the US retail sales and consumer inflation reports on November 14 and November 15, respectively, having the most potential to change the direction of the economic story.

Barclays analysts warned of yet another rate rise from the Federal Reserve in a letter to investors, stating, "Momentum in the US is still robust and inflation could persist."

According to a Reuters survey of economists, headline consumer price inflation in the US is expected to drop from 3.7% in September to 3.3% in October. However, the so-called core inflation rate—which excludes volatile components—is predicted to remain constant.

Research firm BCA also issued a warning to investors on November 13: "A continuation of the (stocks) rally into the finish of the year is definitely possible, but it may be muted by bearish equity sentiment driven through both heightened geopolitical underlying financial market risk."

On November 13, the dollar hit a new one-year high against the yen because to concerns about rate hikes and risk aversion.

A one-week high of 4.668% was also reached by benchmark 10-year Treasury rates early on Monday, as worries over inflation diminished the allure of the fixed interest-paying debt instruments. Reference 10-year Treasury yields increase when prices decline.

For the first time since mid-October of last year, the dollar reached 151.90 yen on November 13. As of 1536 GMT, it was still trading close to those highs at 151.64. The dollar index, which compares the US currency to six others, remained unchanged at 105.83, not far from its peak for the year, which was hit on October 3.

Global stocks were most certainly nearing a top right now, according to strategist Naka Matsuzawa of Nomura Securities.

"Up until now, the market has been made taking bad data on the economy as good news, because that could indicate a pause in Fed rate hikes," he said.

By saying, "But now, the Treasury market has already priced in an interim, so there's not much room for the yields on Treasury securities to fall further," the stock market's cushion was taken away. "In short, I don't think the stock market rally is proceeding to continue."

The meeting between Chinese President Xi Jinping and US President Joe Biden this week on the fringes of the Asia-Pacific Economic Cooperation (APEC) conference in San Francisco is likely to escalate short-term market tensions.

Ahead of Chinese retail sales statistics later this week, which might further cloud an already bleak picture due to dwindling industrial activity in the second-largest economy in the world, demand concerns overshadowed supply concerns in terms of crude oil prices. (O/R)

Both the January Brent and December US West Texas Intermediate (WTI) oil futures saw a little increase, rising more than 70 cents to $82.23 and $77.94 a barrel, respectively.

On November 10, both benchmarks saw gains of around 2% as Iraq expressed support for OPEC+ oil supply restrictions.