US stock indices retreated once more, as investors priced in stronger odds of a Fed rate hike following the upbeat CPI releases. Headline consumer prices rose 0.4% versus the projected 0.3% increase while the core CPI rose 0.2% as expected. Industrial production, capacity utilizations, and building permits also beat expectations.
The Dow 30 index fell 180.73 points to 17,529.98 (-1.02%), the S&P 500 index retreated 19.45 points to 2,047.21 (-0.94%) and the Nasdaq was down 59.73 points to 4,715.73 (-1.25%). The S&P 500 VIX, which is considered a gauge of market uncertainty, rose 0.89 points to 15.57 (+6.06%) to indicate a return in risk aversion.
European equities mixed, UK CPI disappoints
The German DAX closed 62.71 points down to 9,890.19 (-0.63%), the French CAC 40 was down 14.71 points to 4,297.57 (-0.34%) and the Euro Stoxx 50 closed 18.73 points down to 2,932.66 (-0.63%). Data from the euro zone was weaker than expected, as the trade surplus fell short of consensus.
In the UK, CPI readings showed weaker inflationary pressures, as the headline figure fell from 0.5% to 0.3% while the core reading dipped from 1.5% to 1.2%. Even so, the British pound and the London stock index managed to stay resilient, with the FTSE up 16.37 points to 6,167.77 (+0.27%). Traders appear to be paying closer attention to opinion polls on the looming Brexit referendum, with a larger lead in favor of staying in the euro zone yielding gains for the UK stock market.
Nikkei rises on positive Japan GDP
The latest GDP reading from Japan revealed that the economy expanded by 0.4% in the first quarter of the year, higher than estimates of a 0.1% growth figure. The Nikkei is up 100.75 points to 16,733.55 (+0.61%) also following reports of an upward revision in Japan’s industrial production figure.
In Australia, the quarterly wage price index posted a smaller than expected 0.4% gain, pushing the S&P ASX 200 index down by 5.07 points to 5,390.80 (-0.09%). The China A50 index is down 40.24 points to 9,303.44 (-0.43%) and the Hang Seng is down 252.80 points to 19,841.50 (-1.24%) as risk appetite is looking weak so far. New Zealand reported a 2.6% gain in its dairy price index but printed weaker than expected producer prices for the first quarter.
The FOMC minutes are up for release in the next US session, likely triggering additional volatility across financial markets.
To contact the reporter of the story: Samuel Rae at firstname.lastname@example.org