European stocks and Wall Street futures slipped on Thursday after sour U.S. economic data fueled fears of a looming recession, although the figures raised the chance of a smaller rate hike at the Federal Reserve’s meeting at the end of the month.
The Stoxx Europe 600 regional index fell 0.7 percent, Germany’s Dax lost 0.5 percent and London’s FTSE 100 lost 0.4 percent in early trade.
Contracts tracking Wall Street’s benchmark S&P 500 and the tech-heavy Nasdaq 100 were down 0.1 percent and 0.02 percent before the open in New York.
December data showing weak U.S. retail sales and a sharp drop in industrial production sent the S&P 500 down 1.6 percent on Wednesday, reversing a rally in stock markets amid signs of slowing economic growth.
Believing that inflation has peaked, investors are increasingly worried about the depth of the expected recession and the effects of the Fed’s aggressive monetary tightening campaign on corporate profits. of Microsoft the decision to lay off 10,000 employees just added to the gloom.
Slowing economic activity exacerbated “worries about growth and corporate earnings among equity investors” but reinforced the “disinflation story” for bond investors, analysts at JPMorgan said.
US Treasuries rallied in the previous session, with the yield on the benchmark 10-year note falling another 0.03 percentage point to 3.34 percent on Wednesday morning. Bond yields move inversely to prices.
Softer-than-expected retail sales and industrial production also weakened the dollar, which fell 0.15 percent against a basket of six currencies as traders raised their bets that the Fed will raise rates by a quarter of a percentage point to 0.5 percentage point in February. move in december.
Investors’ attention will turn to jobs data on Thursday, with about 214,000 initial jobless claims, a gauge for job cuts, expected in the week ending Jan. 14, up from 205,000 the previous week. Procter & Gamble and Netflix are also scheduled to report fourth-quarter earnings.
Elsewhere, Hong Kong’s Hang Seng index fell 0.1 percent and China’s CSI 300 added 0.6 percent, both indexes having surged in recent months as Beijing reversed its strict zero-Covid policy in December.
Brent crude, the international oil benchmark, fell 0.9 percent to $81.34 a barrel.