Image: Reuters Berita 24 English - On Friday, European stock indexes fell after German producer prices rose by the most ever. At the same t...
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| Image: Reuters |
Berita 24 English - On Friday, European stock indexes fell after German producer prices rose by the most ever. At the same time, the dollar hit its highest level in a month as investors stayed cautious.
Concerns about the health of China's economy made it hard for Asian stocks to find a direction. By 8:20 GMT, the MSCI world equity index, which tracks shares in 47 countries, was down 0.3% for the day.
German producer prices, which are seen as a leading indicator of inflation, went up the most ever in July, according to data released early in the session. This was because the cost of energy kept going up. Compared to July 2021, energy prices went up 105%. This was mostly due to higher prices for natural gas and electricity.
On Thursday, the price of natural gas hit a record high at the end of the day. The finance ministry of Germany said on Friday that the country's economy is in bad shape.
The STOXX 600 was down 0.4% for the day and was on track for a 0.4% drop for the week as well.
German bond yields went up, with the 10-year yield going up as much as 8 basis points to 1.184%, a four-week high. This was because the producer price data was seen as adding to fears of "stagflation," which is a combination of high inflation and low growth.
In August, the mood of UK consumers was the worst it had been since at least 1974. People felt "exasperated" about the rising cost of living.
The British retail sales numbers for July were higher than expected. This was due to a rise in online spending, but sales are likely to start falling again as prices go up.
The Bank of England has said that Britain is likely to go into a recession later this year because of high inflation.
"When market participants get back from vacation and look back on the last few days and weeks, they will see that central banks are still a long way from reaching their goal of bringing inflation down," ING rates strategists wrote in a note to clients.
"That means there will be a fight between the central bank's plans to tighten monetary policy and fears of a recession."
The markets were also worried about higher borrowing costs because not one but four U.S. Federal Reserve officials said there was more work to be done on interest rates, with the only difference being how fast and high to go.
The Fed's hawkish comments helped the U.S. dollar, which hit a one-month high. At 107.7, the dollar index had gone up 0.2%, and the euro was worth $1.008. So far this week, the euro has lost 1.7% of its value against the dollar.
The dollar went up against the Japanese yen as well. At 136.54, the pair was up 0.5%.
The yield on a 10-year U.S. Treasury note went up, and at 2.9317%, it was close to a one-month high.
Oil prices went down after going up for two days in a row. Traders were worried about a slowdown in the world economy, which led to a weekly drop.
Bitcoin fell sharply and hit its lowest price in three weeks at $21,404.
Next week, investors will be paying close attention to the minutes from the European Central Banks' July meeting and to what U.S. Federal Reserve Chair Jerome Powell says on Aug. 26 at the annual global central banking conference in Jackson Hole.
Flash PMI data for the UK and the euro area is due on August 23.
