European markets: Inflation, rates, growth concerns

LONDON — European markets pulled back on Friday, tracking U.S. and Asian counterparts as global stocks start the fourth quarter on the backfoot.

The pan-European Stoxx 600 fell 0.8% in early trade, with banks shedding 1.6% to lead losses as almost all sectors and major bourses slid into negative territory. Utilities was one sector in the green, climbing 0.7%.

Shares in Asia-Pacific also suffered during Friday’s trade, with Japan’s Nikkei 225 dropping more than 2.5% to lead losses. Mainland Chinese and Hong Kong markets were closed for public holidays.

Stateside, U.S. futures pointed to opening losses on Wall Street in early premarket trading after the S&P 500 suffered its worst month since March 2020.

Global markets have been roiled by fears of persistent high inflation, slowing growth and rising rates.

All eyes will be on inflation figures due later in the day.

Flash estimate of inflation for the euro zone is due at 10 a.m. London time. Meanwhile, in the U.S., core personal consumption expenditures price index, the Federal Reserve’s preferred policy-guiding metric, is expected to rise 0.2% in August and 3.5% annually.

Euro zone finance ministers will meet Monday to discuss the economic fallout from soaring energy prices, amid concern that they could impact the bloc’s recovery and disproportionately affect the poorest.

In Germany, the conservative CDU-CSU bloc is set to hold coalition talks with the liberal Free Democrats (FDP) on Sunday, Reuters reported Thursday citing CDU-CSU sources. The conservative bloc narrowly lost out to the center-left Social Democratic Party (SDP) in last weekend’s federal election, but both sides are seeking alliances with other parties in the hopes of forming a coalition government.

On the data front, German retail sales climbed 1.1% month-on-month in August, official figures revealed on Friday, slightly below a Reuters consensus forecast of 1.5%.

In corporate news, BMW lifted its annual profit forecast in an ad hoc statement on Thursday to between 9.5% and 10.5%, up from 7% to 9%. The German automaker said higher prices outweighed the effects of the global semiconductor shortage and other supply chain problems.

British pub chain JD Wetherspoon reported earnings on Friday morning, while Daimler and Credit Suisse both held extraordinary general meetings.

In terms of individual share price movement, British sportswear retailer JD Sports fell 4.4% to the bottom of the Stoxx 600 after the U.K.’s competition regulator launched a probe into the company and Leicester City Football Club.

At the top of the index, French utility EDF climbed 3.7% after French Prime Minister Jean Castex said Thursday that February’s electricity price increase would be capped at 4%.

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