Global stock markets fall as investors cautiously await Fed decision

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The Fed is expected to raise its benchmark rate another three-quarters of a percent to 4%. Photo: Kevin Lamarque/Reuters

European stock markets started the day in positive territory but later reversed gains as investors cautiously awaited the Federal Reserve’s interest rate decision.

In London, the FTSE 100 (^FTSE) was down 0.5% at the end of the day, while the CAC (^FCHI) lost 0.7% in Paris, and the DAX (^GDAXI) was down 0.5%. 0.6%.

News that eurozone manufacturing activity fell in October to its lowest level since the first lockdowns in 2020 also sent stocks tumbling in the session.

The S&P Global PMI survey showed that all of the bloc’s biggest economies, except Ireland, saw the slowdown worsen. Spain was the hardest hit, followed closely by Germany.

However, pharmaceutical stocks rose on the London benchmark after GSK (GSK.L) raised its outlook for the full year on strong demand for its shingles vaccine and launches. new drugs.

He now expects annual sales growth of between 8% and 10%, with an increase in operating profit of between 15% and 17%.

Meanwhile, the cost of fresh food in the UK soared at the fastest rate on record last month, at 13.3%. This is the biggest increase since the British Retail Consortium (BRC) started collecting monthly data in 2005.

Overall food prices jumped a record 11.6%, including a 9.4% rise in staples such as canned goods and other less perishable items.

The BRC said the increases reflect a tight labor market and rising energy costs for retailers.

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Wall Street stocks were also in the red on Wednesday as the dollar weakened as investors braced for the outcome of Federal Reserve policy later in the day.

The S&P 500 (^GSPC) fell 0.7% and the tech-heavy Nasdaq (^IXIC) fell 1.3% at the European close. The Dow Jones (^DJI) edged down 0.4%.

The Fed is expected to raise its benchmark rate another three-quarters of a percent to 4%.

Neil Wilson of Markets.com said: “The market continues to hope for some sort of cautious language on reducing the pace of the upsides.

“In his remarks at the last two press conferences, Powell said that “at some point, as the monetary policy stance tightens further, it will become necessary to slow the pace of increases as we assess how our cumulative policy adjustments affect the economy “and inflation”. Any change to that – perhaps suggesting that this point could happen – can be seen as a pivot.”

Meanwhile, U.S. businesses added more jobs than expected last month, thanks to increased hiring at bars and restaurants, retailers and travel agencies.

According to payroll operator ADP, employment in the private sector rose by 239,000 jobs in October, more than the 195,000 expected.

Read more: Interest rates: what the Bank of England’s biggest hike in 33 years means for you

US markets lost initial momentum on Tuesday, ending the session lower, after the latest job vacancies figures and the ISM manufacturing report showed the US economy remained in decent shape, despite concerns over an economic downturn.

Asian stocks were mixed after early cautious trading on Wednesday. The Nikkei (^N225) lagged its peers, ending just 0.1% lower on the day in Japan. Meanwhile, the Hang Seng (^HSI) rose 2.4% in Hong Kong and the Shanghai Composite (000001.SS) rose 1.1%.

Chinese authorities have ordered a critical iPhone production facility into an extended lockdown as Beijing continues to battle a coronavirus outbreak.

Workers at the Zhengzhou plant have been barred from traveling under a seven-day lockdown, which is likely to spark further discontent among staff.

Watch: How does inflation affect interest rates?

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