Caution grips share markets as US inflation data awaited

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Prospect of Fed tapering in next few months is a negative catalyst

An employee passes share price information displayed on an electronic ticker board inside the London Stock Exchange Group’s offices in London, the UK. Picture: BLOOMBERG VIA GETTY IMAGES/LUKE MACGREGORWorld share markets barely moved and the dollar held steady on Tuesday, as investors awaited US inflation data for more clues on the health of the world’s largest economy and when the Federal Reserve could start to taper stimulus.

“Equity prices have been very high, so clients are more cautious now. There is the prospect of Fed tapering in the next two to three months and that is a negative catalyst for markets.” The Nasdaq Golden Dragon China index, which tracks Chinese companies listed in the US, fell 1.1% on Monday, to take its decline over the past six months to 35.5%.

Meanwhile, markets are awaiting US inflation data on Tuesday, expected to show core consumer prices rose 0.3% in August. Prices were up 0.3% the previous month and 0.9% in June. Goldman Sachs estimates a tax rate increase to 25% plus half of the proposed hike in foreign income tax rates could shave 5% off S&P500 earnings in 2022.

 

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