Stock markets mostly fall on eve of US inflation

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Stock markets were mostly down and the dollar fell on Tuesday on the eve of key US inflation data.

Investors are jittery ahead of Wednesday’s numbers, with some observers warning that a reading above the inflation estimate, which is already at its highest level in four decades, could trigger a further sell-off in the market.

Interest rate hikes by central banks aimed at curbing soaring prices are also increasingly expected to go too far and tip the global economy into recession.

Swissquote Bank analyst Ipek Ozkardeskaya said the recent drop in energy and commodity prices “should have a cooling effect on inflation, but rising labor costs could keep inflation at undesirably high levels”.

Oil prices rose but remain around six-month lows as recession fears grow and traders worry about the impact on demand. They are also monitoring Iran nuclear talks after the European Union submitted a ‘final text’ in talks to salvage a 2015 deal. A deal could pave the way for Tehran to resume crude sales on international markets , helping in part to fill a hole left by the ban on Russian exports following the invasion of Ukraine.

Edward Moya, analyst at trade group OANDA, said “a breakthrough seems unlikely to happen anytime soon. Tehran seems willing to negotiate, but an imminent decision to accept the EU proposal seems unlikely”, he added.

European and Asian stock markets mostly fell after Wall Street provided a dismal lead overnight. Tech companies took a hit following a disappointing earnings report from chip giant Nvidia, seen as a warning that the end of the recession was still a long way off.

“While it’s tempting to accept the narrative that we’ve seen year-to-date lows, none of the price action so far serves to support that conclusion,” said CMC analyst Michael Hewson. Markets. “Nvidia’s earnings warning simply serves to highlight the challenges facing not just the tech sector, but the broader global economy.”

Nvidia’s earnings warning simply serves to highlight the challenges facing not just the tech sector, but the wider global economy– Michael Hewson, analyst at CMC Markets

Hong Kong canceled a morning rally after its government denied claims it was considering scrapping an additional stamp duty for mainland Chinese buying property in the city.

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