Stocks fall, oil holds gains ahead of key US inflation data

Shares fell on Wednesday as markets braced for key U.S. inflation data, with a spike in oil prices fuelling anxiety that price pressures are proving more ingrained than hoped.

European stocks (.STOXX) fell as much as 0.5% in early trading, with rate-sensitive tech stocks (.SX8P) losing 0.8%.

The crucial U.S. Consumer Price Index (CPI) report, due at 1230 GMT, will shed light on the inflation outlook and provide some clarity over whether the Federal Reserve has finished raising rates.

While core CPI is seen cooling to 4.3% year-on-year in August from 4.7%, rising energy costs are forecast to keep headline inflation elevated at 3.6%. And the latest spike in oil prices to 10-month highs is unlikely to escape the Fed’s attention.

“We are praying that the consensus will be right, which will show that inflation is moderating,” said Robert Alster, chief investment officer at Close Brothers Asset Management

“The real risk here is that it doesn’t show that … then you’ll get quite severe markets movements this afternoon.”

The euro, meanwhile, was supported by a hawkish 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 MSCI world equity index (.MIWD00000PUS), which tracks shares in 47 countries, was steady.

This report’s information was first seen on REUTERS; to read more, click this link.