Global shares fall as investors scrutinise economic data

Global stocks slipped on Thursday, as investors weighed conflicting economic data emerging from the world’s largest economy and reacted to a gloomy set of forecasts for the UK.

Wall Street’s S&P 500 fell 1.1 percent in early trade, while the tech-heavy Nasdaq Composite fell 1.4 percent. London’s FTSE was 0.6 percent lower after UK Chancellor Jeremy Hunt admitted the country’s finances were “consolidating” and the economy was in recession.

The regional Stoxx Europe 600 fell 0.9 percent and Germany’s DAX fell 0.4 percent, erasing earlier gains.

UK output will return to pre-pandemic levels by the end of 2024, the Office for Budget Responsibility said, two years later than the fiscal watchdog forecast in March. Unemployment will rise by 505,000 in the third quarter of 2024 from 3.5 percent to 4.9 percent.

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Sterling was trading 0.9 percent lower against the dollar at $1.181 shortly after Hunt’s statement to parliament, extending losses earlier in the day. Gilts sold off across the board – the 10-year yield rose 0.07 percentage points on the day, while the two-year yield edged up 0.13 percentage points to 3.11 per cent.

Figures on Wednesday showed UK inflation hit a 41-year high in October, rising to 11.1 per cent from 10.1 per cent in September as energy and food prices rose.

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The reading adds pressure on the Bank of England to raise interest rates from their current level of 3 percent when they meet next December. Silvana Tenrero, an external member of the BoE’s monetary policy committee, warned last week that UK rates were already higher than necessary.

Paul Dales, chief UK economist at Capital Economics, said Hunt had “protected the economy by loosening policy for the next two years and tightening over the next three”, but UK interest rates would still need to rise to 5 per cent. To control inflation.

U.S. retail sales rose 1.3 percent in October, beating economists’ forecasts for a 1 percent rise, after a stronger-than-expected increase. Another batch of data on Wednesday showed U.S. manufacturing output rose 0.1 percent in October, slightly below the 0.2 percent increase expected.

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In US government bond markets, the yield on the two-year Treasury note was unchanged at 4.36 percent, while the yield on the benchmark 10-year note rose 0.03 percentage points to 3.72 percent. As prices fall, yields rise.

Adding to losses in the previous session, Asian stock prices fell on Thursday.

Hong Kong’s Hang Seng index fell by 1.2 percent, China’s CSI 300 by 0.4 percent and South Korea’s Kospi by 1.4 percent. Japan’s Topix rose by 0.2 percent.

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