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Investing.com – European stock markets slumped Friday, starting the fourth quarter on a weak note on concerns rising inflation will prompt central banks to withdraw stimulus just as growth slows.
At 3:25 AM ET (0725 GMT), the DAX in Germany traded 1.1% lower, the CAC 40 in France fell 1% and the U.K.’s FTSE 100 dropped 0.8%.
These losses followed on from weakness in Asia earlier Friday, with the Nikkei index in Japan dropping more than 2%, while markets in Hong Kong and mainland China were closed, and on Wall Street overnight, with the blue chip Dow Jones Industrial Average falling more than 500 points, or 1.6%.
The disappointing news continued Friday, as German retail sales rose 1.1% on the month in August, a rebound from the revised 4.5% drop the previous month but below the 1.5% increase expected.
In corporate news, Daimler (OTC:DDAIF) stock fell 2.6% as shareholder vote on potentially spinning off its truck-making division from its Mercedes-Benz luxury car operations. A similar move by Volkswagen (DE:VOWG_p), down 2.2%, two years ago has done little to unlock additional value in its truck business Traton.
U.K. retail stocks suffered more than most, as investors priced in the likely hit to consumer spending from a tightening of fiscal policy as the government withdraws many of its pandemic-era supports. AO World stock fell 17% after its half-year update showed sales growth slowing to a crawl, while fast fashion group Boohoo (LON:BOOH) fell 2.1% to an 18-month low and rival ASOS (LON:ASOS) fell to a 16-month low. JD (NASDAQ:JD) Sports Fashion (LON:JD) stock fell 4.3%.
Global markets have been unnerved by persistently high inflation while growth appears to slow and central banks look to withdraw their accommodative monetary policies.
With that in mind, investors will focus on the release of key inflation data later Friday and the likely response from the European Central Bank as the region’s economy recovers from the pandemic.
The September Eurozone CPI is due at 5 AM ET (0900 GMT), and is expected to show an annual rise of 3.3%, climbing from the 3.0% level in August. The figures will test the resolve of a European Central Bank that is still convinced that inflation will quickly fall back below its medium-term target of 2%.
Crude prices edged lower Friday as traders prepared for next week’s meeting of top producers and the potential for additional output to ease the current tight supply concerns.
The Organization of the Petroleum Exporting Countries and allies led by Russia, a group known as OPEC+, are scheduled to meet on Monday, and could boost production beyond the 400,000 barrels per day already agreed for November and December given the backdrop of oil hovering near three-year highs.
By 3:25 AM ET, U.S. crude futures traded 0.3% lower at $74.83 a barrel, while the Brent contract fell 0.2% to $78.12.
Additionally, gold futures fell 0.2% to $1,754.35/oz, while EUR/USD traded 0.1% higher at 1.1587.
