Aurelia Butler

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LONDON (Reuters) – Global shares and U.S. stock futures eased on Wednesday, shrugging off data that showed a key measure of U.S. inflation cooled in August, as it did little to change the outlook for Federal Reserve monetary policy in the near term.U.S. stock index futures were last roughly flat on the day, having shown a 0.2-0.3% loss earlier, while dollar eased, after data showed the Consumer Price Index (CPI) rose by 3.7% in August, above expectations for a rise of 3.6% and after July’s 3.2% rate.Core inflation, which is of greater concern to the Fed as it strips out food and energy prices, ran at a 4.3% year-on-year rate in August from 4.7% the previous month. The increase in the headline rate was a function of a surge in the cost of gasoline, in line with the jump in oil prices to their highest in 10 months.The MSCI All-World index was last down 0.1% on the day, compared with a 0.2% decline ahead of the data, while European stocks were down 0.6%, showing no change on pre-data levels.”The move higher in headline inflation is a head-fake since it was mostly driven by a huge 10.5% jump in energy commodity prices,” said Brian Jacobsen, chief economist at Annex Wealth Management in Wisconsin.”The head-fake can still be a headache for the Fed as they have to explain why inflation is trending lower despite what people are seeing at the pump,” Jacobsen added.Markets have ruled out a hike next week, but have been split 50/50 on whether the central bank will raise rates again in November. Wednesday’s CPI numbers did not shake that perception.Treasury yields retreated from the day’s highs, leaving the two-year note unchanged at 5.00%, while yields on the 10-year note were last up 3 basis points at 4.296%, but down from a session high of 4.352%.ECB UP NEXTThe dollar index was up 0.1% on the day, losing out to the euro, which rose 0.1%, supported by a shift in expectations for the European Central Bank on Thursday, with bets now favouring a hike, after a Reuters report that the ECB expects inflation will stay above 3% next year in its updated forecasts. “The leak raises the possibility of a hawkish hike which would be much more supportive for the EUR,” said Steve Englander, global head of G10 FX research at Standard Chartered (OTC:SCBFF), referring to the Reuters report. “Our baseline view is that the ECB will signal a hawkish hold and be deterred by soft growth from further hikes. … We think it is a close call.”Oil, meanwhile, clung on to the day’s gains after the data. Benchmark Brent futures were up 0.3% at $92.33 a barrel, having traded with a daily gain of 0.5% before the inflation data, while West Texas Intermediate (WTI) crude was up 0.3% at $89.13.Gold, which tends to move inversely to the dollar, was flat at $1,912 an ounce. More

NEW YORK (Reuters) – The dollar index held onto slight gains on Wednesday, after U.S. economic data showed inflation picked up in August, although underlying inflation pressures rose modestly and could give the Federal Reserve cushion to keep interest rates on hold at its meeting next week. The consumer price index increased by 0.6% last month, the largest gain since June 2022, the Labor Department said on Wednesday amid a jump in gasoline prices. Excluding the volatile food and energy components, the CPI increased 0.3% as prices for used cars and trucks declined.”The move higher in headline inflation is a head-fake since it was mostly driven by a huge 10.5% jump in energy commodity prices,” said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin.”The head-fake can still be a headache for the Fed as they have to explain why inflation is trending lower despite what people are seeing at the pump. Shelter inflation is continuing its slide towards something less ridiculous.”The dollar index, which tracks the currency against a basket of rival currencies, was modestly higher but off earlier highs with a gain of 0.03% to 104.62. The Fed is scheduled to make its next policy announcement at the conclusion of its Sept. 19-20 meeting. More

NEW YORK (Reuters) – Chinese stocks took a record hit as foreign investors yanked $15.5 billion out of emerging market portfolios in August, the largest monthly outflow in a year, as concerns over China’s growth permeated across equities in an otherwise strong year for EMs.A monthly report from the Institute of International Finance showed non-residents funneled $14.9 billion out of China stocks, the largest monthly outflow on records back to 2015, while Chinese debt saw $5.1 billion in outflows.Investors were underwhelmed by China’s economic growth and a lack of fresh stimulus measures by the government at the end of July, as the government sacrifices steeper growth for shared prosperity. Fresh turbulence in the property sector added to the negative investor tone.The broad MSCI stock and currency emerging market indexes posted in August their largest monthly drops since February.The emerging market outflows highlight “the negative sentiment over (China’s) economic challenges, amid skepticism over measures to stem the economic slowdown,” according to IIF economist Jonathan Fortun.Earlier on Wednesday Amundi, Europe’s largest asset manager, lowered its view on Chinese equities and said it has upgraded U.S. growth forecasts while downgrading China’s.Equity outflows ex-China were $6.6 billion last month, the most since September 2022, while ex-China debt securities saw the seventh month of inflows in the last eight, adding $11.1 billion.”Diminished currency volatility (…) is encouraging foreign creditors to benefit across EM local yield curves,” Fortun said.Emerging Asia and Latin America saw outflows just below $5 billion last month, while the Africa and Middle East region posted $5.5 billion in negative flows, the IIF report showed.Equities fell across all geographical regions while debt posted inflows in Asia, Latam and emerging Europe.Year-to-date numbers through August show a $13.1 billion outflow from China while emerging markets ex-China has seen $139.5 billion in non-resident portfolio inflows. More