GLOBAL stocks moved lower yesterday as stronger than expected US retail sales data dimmed investors’ hopes for an early start to interest rate cuts, while weak Chinese growth data and an unexpected rise in UK inflation gave them further cause for concern.

The US Federal Reserve recently held interest rates steady and pencilled in as many as three cuts this year, spurring traders to anticipate the first of them could come as early as March.

But Fed officials have suggested they are comfortable waiting a little longer to see if inflation is indeed falling towards their long-term target of 2%. 

Stocks on Wall Street lost ground yesterday after fresh government data showing retail sales in the world’s biggest economy picked up by 0.6% from November to December, closing out a year marked by resilient consumption demand.

That’s because stronger sales data indicate the economy is still chugging along, which could slow down, or even reverse, the fall in inflation in the months ahead.

The Dow Jones Industrial Average slipped 0.3%, while the broad-based S&P 500 and the tech-rich Nasdaq Composite index both ended 0.6% lower. 

“I think we are seeing the market readjusting to the hype of a cut rate in March,” said Peter Cardillo of Spartan Capital.

He added that a March rate cut is likely “off the table” give the economy’s performance and the way central bank officials have talked about cautiousness in lowering rates.

Growth sputters in China

Another headache for investors is the economic picture in China – the world’s second biggest after the United States – which, according to official data, grew last year at the slowest pace since 1990 save for the pandemic years. 

China’s National Bureau of Statistics said GDP expanded 5.2%, in line with official targets.

However, the headline numbers hid some worrying developments reported elsewhere, such as a declining population, falling house prices and a drop in retail sales.

Further economic gloom came a few hours later, yesterday morning in Europe, when official data showed UK annual inflation inched higher in December, contrary to market forecasts of a slight reduction.

It dashed hopes the Bank of England would cut interest rates in the first half of 2024, boosting the pound against the dollar.

The European Central Bank could soon start cutting interest rates, President Christine Lagarde said yesterday, adding it was unlikely to happen before the summer.

“Enthusiasm about possible near-term rate cuts has been tempered further by European Central Bank President Lagarde, who echoed recent comments by other central bankers, saying rate cuts are likely to begin this summer,” said analysts at Briefing.com.

Key figures around 2030 GMT

New York - Dow: DOWN 0.3% at 37,266.67 points (close) 

New York - S&P 500: DOWN 0.6% at 4,739.21 (close) 

New York - Nasdaq: DOWN 0.6% at 14,855.62 (close) 

London - FTSE 100: DOWN 1.5% at 7,446.29 (close)

Paris - CAC 40: DOWN 1.1% at 7,318.69 (close)

Frankfurt - DAX: DOWN 0.8% at 16,431.69 (close)

EURO STOXX 50: DOWN 1.0% at 4,403.08 (close)

Tokyo - Nikkei 225: DOWN 0.4% at 35,477.75 (close)

Hong Kong - Hang Seng Index: DOWN 3.7% at 15,276.90 (close)

Shanghai - Composite: DOWN 2.1% at 2,833.62 (close)

Pound/dollar: UP at US$1.2680 from US$1.2635 on Tuesday

Euro/pound: DOWN at 85.81 pence from 86.07 pence

Euro/dollar: UP at US$1.0884 from US$1.0879

Dollar/yen: UP at  ¥148.19 from  ¥147.18

West Texas Intermediate: UP 0.2% at US$72.56 per barrel

Brent North Sea Crude: DOWN 0.5% at US$77.88 per barrel – AFP, January 18, 2024.