European stocks fall as traders wait for US inflation data

China’s Shanghai Composite Index hit its highest since August 2015, and European markets initially opened higher, but fell during the session.

European stock markets slipped on Friday, but were still on track for another weekly gain, and the dollar was steady as market watchers waited for U.S. inflation data.

Wall Street had closed higher on Thursday, as sentiment got a boost from the White House confirming that U.S. President Donald Trump would meet Chinese President Xi Jinping next week as part of his trip through Asia. The meeting, which would come ahead of a November 1 deadline for further U.S. tariffs on Chinese imports, was seen as a sign of slightly easing tensions between the U.S. and China.

China’s Shanghai Composite Index hit its highest since August 2015, and European markets initially opened higher, but fell during the session.

At 1110 GMT, the pan-European STOXX 600 was down by around 0.2% on the day, but still on track for a weekly gain. London’s FTSE 100 was down by less than 0.1%.

The MSCI World Equity index was flat, set for a 1.2% gain on the week overall.

Still, Wall Street futures were up, with S&P 500 e-minis up 0.3% and Nasdaq e-minis up 0.5%.

U.S. stock markets have surged this year, hitting record highs as traders pour money into artificial intelligence and bet that the U.S. Federal Reserve will continue to cut rates. Analysts say there are signs of a bubble.

On Friday, investors were waiting for U.S. inflation data, which has been delayed due to the government shutdown. The Consumer Price Index (CPI) report, which is due at 0830 ET (1230 GMT), is expected to show core inflation having held at 3.1% in September.

The Fed is expected to cut rates by 25 basis points at its meeting next week.

“It’s just a continuation of a broadly supportive environment for equities where interest rates are broadly coming down across the developed markets, probably with the exception of Japan, volatility after a brief spike has started to come down again, there’s no major earnings surprises,” said Peter Fitzgerald, chief investment officer for macro at Aviva Investors.

“It’s always impossible to predict when a bull market is going to end or what exactly is going to end it,” he said, adding that he would expect an eventual market correction to come from AI and large technology companies.

CANADA TRADE NEGOTIATIONS CANCELLED BY TRUMP

The dollar index was at 99.028, up by around 0.1% on the day .

The Canadian dollar saw limited impact from Trump saying on social media that he was ending all trade negotiations with Canada, over what he said was a fraudulent advertisement in which former and late President Ronald Reagan spoke negatively about tariffs.

The yen weakened as the nation’s new prime minister pledged economic stimulus, with the dollar-yen pair at 152.93.

The euro was steady at $1.1612. Euro zone business activity unexpectedly grew at a faster pace in October, data showed. Euro zone government bond yields rose, with Germany’s Bund yields hitting 2.612%, after the data.

Oil prices, which had risen 5% after the U.S. sanctioned major Russian oil companies, eased back down but were still on track for a weekly gain.

Gold was down around 1.6% on the day at $4,058.41 per ounce, and on track for a weekly loss, ending its nine-week winning streak. Gold funds had received their largest weekly inflow on record in the week to Wednesday, Bank of America Global Research said.

Five of the so-called “Magnificent Seven” U.S. companies at the centre of the artificial intelligence boom, including Apple and Microsoft, are due to report earnings next week. Chipmaker Intel’s earnings on Thursday beat expectations.

© ZAWYA