Gold prices slide further as easing US-China tensions curb haven demand
Investing.com - European stocks traded in a mixed fashion Wednesday, as investors digested the potential impact of the U.S. government shutdown ahead of the release of key regional inflation data.
At 03:40 ET (07:40 GMT), the DAX index in Germany dropped 0.4% and the CAC 40 in France slipped 0.2%, while the FTSE 100 in the U.K. rose 0.4%.
U.S. government showdown goes ahead
The U.S. government shut down much of its operations Wednesday after an eleventh-hour spending bill backed by the Republican party failed to clear a Senate vote, amid persistent resistance from the Democrats.
This is the 15th shutdown since 1981, and while most have been settled reasonably quickly, the longest in U.S. history occurred during President Donald Trump’s first term in office, and the political climate is, if anything, more divided now than then.
Trump has used the opportunity to threaten the dismissal of yet more federal workers, with over 150,000 workers due to leave federal payrolls this week after taking a buyout, the biggest exodus in 80 years.
This could have implications for growth in the largest economy in the world, which remains the major global growth driver.
Eurozone inflation release due
Back in Europe, the spotlight will fall on the release of the eurozone inflation data for September later in the session, which is likely to show annual inflation ticked up to 2.2% from 2% previously.
However, risks could be to the upside after German inflation accelerated more than expected in September, rising for a second consecutive month and bringing an end to the disinflationary process of the previous months.
As Europe’s largest economy, German inflation would have a significant impact on the eurozone number.
The European Central Bank kept interest rates on hold last month, and a hot CPI number could point to policymakers suggesting that its easing cycle has come to an end, at least for now.
Novartis receives FDA boost
In corporate news, Novartis (SIX:NOVN) shares gained after the U.S. Food and Drug Administration approved the Swiss drugmaker’s oral treatment for patients with a type of chronic inflammatory skin disease.
BMW (ETR:BMWG) stock slipped slightly after the U.S. National Highway Traffic Safety Administration said the German auto giant is recalling over 145,000 vehicles in the U.S. as the starter motor may overheat from an electrical overload.
Greggs (LON:GRG) stock soared after the U.K.-based bakery chain reported steady third-quarter sales, and maintained its full-year outlook.
Crude steadies after recent losses
Oil prices steadied on Wednesday after two days of declines as investors weighed OPEC+ plans for a larger output hike next month and the outcome of a U.S. government shutdown that could impact economic activity and fuel demand.
Brent futures gained 0.6% to $66.43 a barrel, and U.S. West Texas Intermediate crude futures rose 0.6% to $62.76 a barrel.
On Monday, Brent and WTI both settled more than 3% lower, their sharpest daily declines since August 1. On Tuesday, they each fell 1.5% further.
The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, could agree to raise oil production by up to 500,000 barrels per day in November, triple the increase made for October, Reuters reported earlier this week.
Spot gold hit a record high of $2,875.53 an ounce earlier in the session, while gold futures for December hit a peak of $3,903.45/oz, as the U.S. government shutdown prompted more flows into the safe haven.