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Stocks fall as caution reigns ahead of US inflation data

An investor looks at an electronic board displaying stock information at a brokerage in Beijing, China August 25, 2015. China’s major stock indexes fell more than 6 percent in early trading on Tuesday after a disastrous Monday which saw Chinese stock markets suffer their biggest losses since the global financial crisis, destabilizing financial markets around the world. REUTERS/Kim Kyung-Hoon

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  • Euro STOXX 600 down 0.3%
  • Dollar just clings to recent highs
  • US CPI data due Wednesday

LONDON/HONG KONG, Aug 9 (Reuters) – Stocks edged lower and the dollar clung to recent highs on Tuesday as investors eyed U.S. inflation data due a day later that will likely provide clues. on any further aggressive rate hikes by the Federal Reserve.

The stakes are high for July’s U.S. consumer price report on Wednesday after surprisingly strong U.S. jobs data last week boosted expectations of a sharp rise interest rates to combat soaring inflation.

The broader Euro STOXX 600 (.STOXX) fell 0.3%, after recording its best session in nearly two weeks on Monday, with German stocks (.GDAXI) down 0.4%. Miners (.SXPP) and autos (.SXAP), among the top gainers a day earlier, led the declines on Tuesday.

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“The focus is on tomorrow’s U.S. inflation numbers and whether or not they show signs of easing inflationary pressures,” said Michael Hewson, chief market analyst at CMC Markets. .

“Are we close to peaking, and will tomorrow’s CPI numbers reflect that?”

Wall Street closed virtually flat on Monday after hit jobs data last week bolstered expectations that the Federal Reserve would clamp down on inflation, while a revenue warning from chipmaker Nvidia raised expectations. reminded investors of the slowdown in the US economy.

Investors are now awaiting consumer price data to assess whether the Fed could ease its fight against inflation slightly and provide a better foundation for the economy to grow. Read more

Wall Street futures pointed to slim gains.

The dollar also held just below its recent high as traders wary of a surprise that could pile more upside pressure on interest rates. Against a basket of currencies, the greenback was flat at 106.30.

The MSCI World Equity Index (.MIWD00000PUS), which tracks stocks from 47 countries, fell 0.1%.

Earlier, MSCI’s broadest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) was flat, after giving up modest gains. Japan’s Nikkei (.N225) slid 0.95%, hit by weak quarterly earnings for heavyweights and lower expectations for the gaming market.

INFLATION EXPECTATIONS

There have been encouraging signs for the Fed on the price front, with a New York Fed survey on Monday showing consumer inflation expectations fell sharply in July. Read more

“This will be music to the ears of the Fed, because if this trend continues, it means the Fed may not have to be as aggressive in raising rates,” the Deutsche Bank analysts wrote. .

“One of their big fears is that higher inflation expectations will lead to a self-fulfilling prophecy of higher real inflation.”

Inflation was also on the minds of policy makers. Soaring prices across the world are expected to top the agenda at the central bank’s Jackson Hole symposium later this month.

The Bank of England will likely need to raise interest rates from their current 14-year high to combat inflationary pressures taking hold in the UK economy, BoE Deputy Governor Dave Ramsden said. Read more

The British pound held at $1.2084. It is down more than 10% this year against the greenback.

Oil prices continued their recent decline after suffering their biggest weekly decline since April 2020 on concerns about stalled global demand as central banks continue to tighten.

U.S. crude fell $1 a barrel, or 0.7%, to $90.07 a barrel. Brent fell 0.8% to $95.91 a barrel.

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Reporting by Tom Wilson in London and Julie Zhu in Hong Kong; Editing by Shri Navaratnam and Jan Harvey

Our standards: The Thomson Reuters Trust Principles.

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