US futures were around the flatline on Wednesday after fresh data showed both US annual and monthly inflation rates were higher-than-expected in September while core figures matched forecasts. Traders try to assess what impact high inflationary pressures will have on the Fed's tapering plan. FOMC minutes release due later in the day is expected to provide more clues on the central bank plans. The new earnings season is expected to show the earnings grew 30% yoy in the third quarter and traders will try to assess what was the impact of rising costs on the corporate results.
The FTSE 100 trimmed earlier losses and moved along the flatline. On the economic data front, traders digested UK's monthly GDP report showing Britain's economy grew 0.4% in August, amid expectations the Bank of England will be hiking interest rates as soon as December. The CAC 40 edged lower, in line with its European counterparts, as traders remained focused on inflation, lower growth prospects, and supply issues. On Tuesday, the IMF revised downwards its 2021 global growth forecast by 0.1 percentage points to 5.9%, citing a significantly gloomier picture for low-income countries amid worsening pandemic dynamics and more difficult near-term prospects for advanced economies due to supply issues. Meanwhile, The FTSE MIB was lower to flat below the 26,000 level on Wednesday, after a 0.2% gain in the previous session. Worries about slowing global economic activity and rising inflation continued to mount, weighing in the possibility of higher interest rates.
The Nikkei 225 Index briefly rallied but quickly gave back gains, losing 90 points or 0.32% to close at 28,140, as investors remain concerned about rising energy costs. Nippon Paint led the fall, tumbling 8.55% after cutting its earnings guidance due to rising costs and supply concerns. Retailers meanwhile resisted the decline, led by department store giant J.Front Retailing after posting positive earnings and amid market optimism over companies that benefit from economic reopening. Elsewhere, Shift Inc. jumped 9.98% after earnings reported today fell within expectations.
The BSE Sensex gained 452.74 points or 0.75% to close at a record high of 60,737.05, with 22 out of 30 stocks on Sensex ending in green. Domestic sentiment was boosted by the strong August industrial production growth, which accelerated for the first time in four months, easing September inflation data (4.3% from 5.3% in August) and IMF’s steady growth forecasts for 2021 and 2022, owing to the high vaccination rate in the country. Among the individual stocks, Mahindra and Mahindra led the gain (+5.17%), as it launched its new range of Yuvo+ tractors in the country, followed by Power Grid Corporation (+3.41%). On the other hand, automaker Maruti fell the most (-2.71%) as it reported a 51% drop in its September production owing to shortage of semiconductor chips.
Chinese stocks bounced sharply higher after September exports unexpectedly accelerated. The Shanghai Composite touched the previous session’s low before bouncing back and closing 0.42% higher at 3,562, while the SZSE Component Index rallied 218 points or 1.54% to close at 14,353. China’s strong export growth in September attributed to a solid global demand, surprised markets amid power shortages and supply chain disruptions that forced factories to cut back on production. Consumer-related stocks led the gains with automaker BYD Company jumping 5.52% and index giant spirit maker Kweichow Moutai rising 3.15%.