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Markets drop on back of US inflation data

Photo by Ryan Tang on Unsplash

European markets fell following the latest inflation data coming out of the US.

According to data collated by CNBC, the pan-European Stoxx 600 was down 0.8% on the same day that US stocks posted their worst results in two years.

Elsewhere, the DAX fell from 13,538.86 in the middle of Tuesday afternoon to 12,952.09 by the end of Wednesday, before emitting a small, almost-insignificant blip of recovery. Across the border, France’s CAC 40 saw a similar drop, falling from 6,338.54 to 6,187.86 over the same period. Spain’s IBEX 35 dropped, too, from 8,219.20 to 8,054.40.

These came on the back of an inflation report by the US Federal Reserve that showed consumer prices rising in August rather than falling as predicted.

As The New York Times assessed it: “Stocks in Asia and Europe sank this morning as fears grow that to cool off inflation, central banks, led by the Fed, will need to quash consumer demand through more aggressive interest-rate increases. Economists at Nomura and Larry Summers, the former Treasury secretary, are among those arguing that the Fed should raise its benchmark rate by a full percentage point next week. The S&P 500 tumbled more than 4% yesterday, the biggest one-day drop since June 2020, on interest-rate jitters.”

The UK’s Daily Telegraph was more succinct, stating that the high data from the US ‘raised fears of a recession in the world’s largest economy’, a state of affairs that even Mr Magoo could see.

Other places have been sounding the recession klaxon in recent days.

McKinsey just released a podcast that looked at what consumer packaged goods (CPG) manufacturers can do to navigate the current situation.

The highlighted soundbite of the conversation was Pieter Reynders, partner at the Brussels office of McKinsey & Company.

Reynders said: “Nearly two-thirds of all consumers feel negatively about the future of their economy. This then translates into consumer behaviour: 74% of consumers in Europe have tried new shopping behaviours, 40% have tried private-label brands, 33% have switched brands, and 27% have switched the store or retailer that they shop at, significantly moving toward discounters. So we’re seeing recessionary behaviours and quite a lot of pessimism on the consumer side.”

Pete Carvill

Pete Carvill is a reporter, writer, and editor based in Berlin who has been writing for the B2B and mainstream media since 2007. He is a contributing writer for Expert Investor and, in addition, has...

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