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Wall Street shares down as inflation worry offsets U.S.-China optimism

Stock MarketsSep 10, 2021 04:46PM ET
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2/2 © Reuters. FILE PHOTO: A men wearing a mask walk at the Shanghai Stock Exchange building at the Pudong financial district in Shanghai, China, as the country is hit by an outbreak of a new coronavirus, February 3, 2020. REUTERS/Aly Song 2/2

By Chris Prentice and Simon Jessop

WASHINGTON/LONDON (Reuters) -Wall Street main indexes finished lower on Friday after data showing persistent U.S. inflation offset expectations of an easing in U.S.-China tensions after a call between President Joe Biden and China's Xi Jinping.

U.S. producer prices increased solidly in August, indicating that high inflation is likely to persist for a while, with supply chains remaining tight as the COVID-19 pandemic drags on.

"Headlines reflecting the highest annual producer price increases in decades won’t give those worried about inflation much comfort, but the smaller month-over-month increase and recent evidence indicating supply chain bottlenecks are no longer intensifying suggest a peak in producer inflation may be near," said Marc Zabicki, director of research for LPL Financial (NASDAQ:LPLA).

The Dow Jones Industrial Average fell 64.65 points, or 0.19 percent, to 34,814.73; the S&P 500 lost 4.21 points, or 0.09 percent, to 4,489.07 and the Nasdaq Composite dropped 3.20 points, or 0.02 percent, to 15,245.06.

Earlier, global equities markets gained after news that the U.S. president and his Chinese counterpart spoke for 90 minutes on Thursday, their first talk in seven months, discussing the need to avoid conflict between the world's two largest economies.

China shares rose 0.08%, giving a fillip to the region and lifting MSCI's World index, its broadest gauge of global stock markets 0.07%, on course to end a three-day losing streak.

Despite the gains, helped by a similar performance across Europe's top markets, the index remains down 0.6% on the week and on course for its first drop in three, albeit hovering near a record high.

Apple Inc (NASDAQ:AAPL) fell over 3% following a U.S. court ruling in "Fortnite" creator Epic Games' antitrust lawsuit that struck down some of the iPhone maker's restrictions on how developers can collect payments in apps.

The pace at which central banks, especially the U.S. Federal Reserve and European Central Bank, choose to trim their economic support remains the driving force of market sentiment amid rising inflation concerns.

Thursday's move by the ECB to trim bond purchases slightly is expected to be followed by the Fed later this year, according to some officials, despite a weak August U.S. jobs report.

"With the ECB raising its economic projections for 2022 and beyond, it appears that the high-water mark in policy accommodation has been passed," said Mark Dowding, chief investment officer at BlueBay Asset Management.

Looking ahead, Dowding said next week's U.S. inflation print could help dictate near-term market direction.

Despite the prospect of reduced stimulus packages, Mark Haefele, chief investment officer at UBS Global Wealth Management, said he expected central banks to keep interest rates low.

"This is positive for equity markets, particularly cyclical and value areas of the market. And while this complicates the search for yield, we continue to see opportunities," he wrote in a note to clients.

"In currencies, we think going long GBP and NOK and short EUR and CHF should provide a mid- to high-single-digit percentage upside on a total return basis over the next six to 12 months."

Against the broader risk-on backdrop, and despite persistent concerns around COVID infection rates, the greenback was up 0.1% against a basket of major peers.

The euro was last down 0.12 percent, at $1.1811, while Europe's broad FTSEurofirst 300 index dropped 0.23 percent at 1,796.26.

The yield on benchmark 10-year Treasury notes rose after the U.S. inflation data.

Elsewhere in currencies, the pound fell 0.01% despite data showing the British economic recovery slowed in July.

Oil rallied to $73 a barrel on signs of tight U.S. supplies after Hurricane Ida hit output. [O/R]

Brent crude rose to settle at $1.47, or 2.3%, to $72.92. The session high was $73.15 a barrel. U.S. West Texas Intermediate (WTI) crude rose $1.58, or 2.3%, to $69.72.

Gold held a tight range on uncertainty over the Fed's tapering timeline. U.S. gold futures settled 0.4% lower at $1,792.1 an ounce. [GOL/]

Wall Street shares down as inflation worry offsets U.S.-China optimism
 

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Comments (9)
MAHMUD IBRAHIM
MAHMUD IBRAHIM Sep 13, 2021 11:31AM ET
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jemin An
jemin An Sep 10, 2021 9:34PM ET
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Biden bow to communist Xi and asking mercy. It is shame
Daniel Hodel
Daniel Hodel Sep 10, 2021 9:34PM ET
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Isn’t Trump the only American President to ever pay taxes to China? How are Melania’s new patents in China working out?
Kochar Bipin
Kochar Bipin Sep 10, 2021 5:51PM ET
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Over 50% of the world's production of metals like steel, aluminum, etc come from China - now that China has not just curtailed production of steel and aluminum by 25 to 30% and imposed export restrictions on these, the rest of world has to pay higher prices for these. China is further cornering all coal produced by Indonesia thus pushing up coal prices to record levels for competing nations like India. Until US and Europe come up with a Marshall Plan to derisk their economies from China's control on strategic metals like steel, aluminum, etc, the world will pay a heavy price for the excessive dependence on China.
Jokers R Us
Jokers R Us Sep 10, 2021 2:36PM ET
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Relax guys the dollar is rallying and gold is selling off because of higher inflation data
Eudon Hickey
Eudon Hickey Sep 10, 2021 7:47AM ET
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You forget, the USA is no longer the leading force
Gerald Zhang
Gerald Zhang Sep 10, 2021 4:13AM ET
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kept waiting for the high
Investing Man
Investing Man Sep 10, 2021 3:38AM ET
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Don't fund China's threats against the world. Taiwan is living in peace and wants to remain that way. As are the rest of the people in the region. International law clearly shows China has no grounds to keep trying to take parts of the ocean that isn't theirs.
Gerald Zhang
Gerald Zhang Sep 10, 2021 3:38AM ET
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Afghanistan want peace too
Necleus Electron
Necleus Electron Sep 10, 2021 3:38AM ET
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what crap international law???? Dictate and fix by few imperialists, arrogant big bullies who think the world has to follow their laws and ideas??? You can take it and shaft up in your cabinet!
Necleus Electron
Necleus Electron Sep 10, 2021 2:26AM ET
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welcome to watch the world's 2 biggest actors in actions!
Joel Schwartz
Joel Schwartz Sep 10, 2021 1:04AM ET
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Remember when markets moved because of what companies were doing instead of how much money central bankers were printing? Man, those were the days.
ro ck
ro ck Sep 10, 2021 1:04AM ET
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Pepperidge farm remembers.
Darrell Peterson
Darrell Peterson Sep 10, 2021 1:04AM ET
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the level of denile
Ricardo Diogo
Rcd72 Sep 10, 2021 1:04AM ET
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the truth is that tax payers money from today and from next10 years is being used in a fraud ponzi greedy market support!
 
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