A sharp rise in consumer prices could put US monetary officials in a bind

New York (AFP) - Stock markets lacked direction Tuesday, with investors sitting tight ahead of key events this week, notably US inflation data and a meeting of the European Central Bank.

Both are set for Thursday, and investors are concerned that strong inflation as pandemic-hit economies reopen to the world could lead to higher interest rates, putting the brakes on the recovery.

Wall Street stocks finished a choppy session little changed while Europe barely moved either side of the positive-negative line after Asia drifted down slightly.

Equities around the world are sitting close to record or multi-year highs after a stellar rally lasting more than a year, fueled by central bank largesse, vast government stimulus worth trillions of dollars, the rollout of vaccines and the easing of lockdowns in major economies.

But there is an increasing fear that the explosive recovery in the United States will send prices rocketing and force the Federal Reserve to wind back its market-supportive measures to prevent overheating.

“Investors are awaiting bigger events later in the week, which may spark some more movement in the markets,” noted Fawad Razaqzada, market analyst at ThinkMarkets.

“The European Central Bank is likely to quell any calls for early tapering of its bond purchases program, and this could see European indices extend their gains.”

He added that unless the US inflation number “comes in well ahead of expectations, the Fed’s stance will not change materially.”

Thursday’s US data is expected to show that consumer prices jumped 4.7 percent last month, which would be the highest level since 2008.

Retail investors on WallStreetBets, part of the Reddit platform, coalesced Tuesday around Clover Health Investments, lifting the insurer by more than 85 percent in the latest surprise wave of stock-buying.

US oil futures finished at about $70 a barrel for the first time since October 2018, reflecting an improving demand outlook in the reopening economy.

- Key figures at 2115 GMT -

New York - Dow: DOWN 0.1 percent at 34,599.82 (close)

New York - S&P 500: FLAT at 4,227.26 (close)

New York - Nasdaq: UP 0.3 percent at 13,924.91 (close)

London - FTSE 100: UP 0.3 percent at 7,095.09 (close)

Frankfurt - DAX 30: DOWN 0.2 percent at 15,640.60 (close)

Paris - CAC 40: UP 0.1 percent at 6,551.01 (close)

EURO STOXX 50: DOWN less than 0.1 percent at 4,096.01 (close)

Tokyo - Nikkei 225: DOWN 0.2 percent at 28,963.56 (close)

Hong Kong - Hang Seng Index: FLAT at 28,781.38 (close)

Shanghai - Composite: DOWN 0.5 percent at 3,580.11 (close)

Euro/dollar: DOWN at $1.2179 from $1.2190 at 2100 GMT

Pound/dollar: DOWN at $1.4149 from $1.4183

Euro/pound: UP at 86.03 pence from 85.95 pence

Dollar/yen: UP at 109.49 yen from 109.25 yen

Brent North Sea crude: UP 1.0 percent at $72.22 per barrel

West Texas Intermediate: UP 1.2 percent at $70.05 per barrel

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