Stock markets were surprised by data on June inflation in the US. The rate of consumer price growth in the United States is the highest since 1981, in month-on-month terms, since September 2005. Markets are worried about a sharp response from the central bank.
Key indexes in the red
All three key indexes on Wall Street were in the red on Wednesday. The tech Nasdaq suffered the smallest loss, which topped just 0.15 percent weaker compared to Tuesday’s trading. The S&P 500 wrote down 0.45 and the Dow Jones Industrial Average 0.67 percent.
The bad mood was enough to affect trading on European exchanges, which also finished in negative territory. Of the European markets, the Frankfurt Stock Exchange, whose DAX index wrote down over one percent, lost the most than a 1 percent loss was also suffered by the pan-European Stoxx 600 index.
Interest rate hike pending
Indeed, investors are wary of a sharp reaction from the US Fed, which will be deciding on setting interest rates in less than two weeks. While so far it has been speculated to increase them by between 0.5 and 0.75 percentage points, now growth of a flat percentage is also in play. That would mean reducing liquidity in the markets and weakening demand for equities.