European stocks are likely to open lower on Friday after an initial rally on Wall Street eventually fizzled into the close overnight.
While the U.S. CPI data reinforced market expectations for a pause in rate hikes at the September meeting, it is feared that sticky core inflation may prompt the Fed to resume raising rates in November.
San Francisco Federal Reserve Bank President Mary Daly on Thursday said that inflation data is moving in the right direction, but the U.S. central bank has ‘more work to do’ to get inflation back down to its 2 percent target.
Gold was little changed, the dollar held steady, and Treasury yields extended gains ahead of key data on U.S. producer prices and consumer sentiment later in the day.
The University of Michigan’s preliminary reading on consumer sentiment includes readings on inflation expectations.
The European economic calendar remains light, with quarterly national accounts from the U.K. and final consumer price figures from France due later in the day.
Asian stocks were trading mostly lower, with Chinese and Hong Kong markets leading regional losses on growth concerns.
Oil prices extended overnight losses on concerns about the outlook for fuel demand in China.
U.S. stocks ended on a flat note overnight, giving up early gains after data showed inflation rose less than expected in July and weekly jobless claims rose more than expected to the highest level in a month, raising hopes that the Fed was close to end its tightening cycle and could start cutting rates early next year.
The consumer price index rose to an annual 3.2 percent in July from 3.0 percent in June and versus estimates of 3.3 percent. Annual core inflation ticked down to 4.7 percent from June’s 4.8 percent.
The Dow edged up 0.2 percent, the tech-heavy Nasdaq Composite inched up 0.1 percent and the S&P 500 finished marginally higher.
European stocks closed higher on Thursday on the back of strong corporate earnings and encouraging U.S. inflation data.
The pan European STOXX 600 jumped 0.8 percent. The German DAX gained 0.9 percent, France’s CAC 40 rallied 1.5 percent and the U.K.’s FTSE 100 added 0.4 percent.
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