European markets pare losses, but remain subdued as inflation fears weigh

LONDON — European markets pulled back slightly on Friday, tracking U.S. and Asian counterparts as global stocks start the fourth quarter on the backfoot

The pan-European Stoxx 600 fell 0.2% by mid-afternoon, recouping much of its earlier losses having been down as much as 1.7% at the start of trading. Banks slipped 1.1% to lead losses while travel and leisure stocks jumped 2.3%

The European blue chip index closed September down 3.4%, ending a seven-month winning streak

Shares in Asia-Pacific also retreated during Friday’s trade, with Japan’s Nikkei 225 dropping more than 2% to lead losses. Mainland Chinese and Hong Kong markets were closed for public holidays

Stateside, U.S. futures pointed to modest gains at Friday’s open on Wall Street in early premarket trading, reversing their earlier course, after the S&P 500 suffered its worst month since March 2020

Global markets have been roiled by fears of persistent high inflation, slowing growth and rising rates

Euro zone inflation in September rose 3.4% on an annual basis, official data showed Friday, the highest reading since September 2008 and up from 3% in August

Soaring energy costs accounted for much of the surge. However, shipping and production bottlenecks also began to bite, leading durable goods price 2.3% higher than in August

In the U.S., investors are awaiting the core personal consumption expenditures price index, the Federal Reserve’s preferred policy-guiding metric, which is expected to rise 0.2% in August and 3.5% annually

Euro zone finance ministers will meet Monday to discuss the economic fallout from soaring energy prices, amid concern that they could impact the bloc’s recovery and disproportionately affect the poorest

In Germany, the conservative CDU-CSU bloc is set to hold coalition talks with the liberal Free Democrats (FDP) on Sunday, Reuters reported Thursday citing CDU-CSU sources. The conservative bloc narrowly lost out to the center-left Social Democratic Party (SDP) in last weekend’s federal election, but both sides are seeking alliances with other parties in the hopes of forming a coalition government

On the data front, German retail sales climbed 1.1% month-on-month in August, official figures revealed on Friday, slightly below a Reuters consensus forecast of 1.5%

In corporate news, BMW lifted its annual profit forecast in an ad hoc statement on Thursday to between 9.5% and 10.5%, up from 7% to 9%. The German automaker said higher prices outweighed the effects of the global semiconductor shortage and other supply chain problems

British pub chain JD Wetherspoon reported earnings on Friday morning, while Daimler and Credit Suisse both held extraordinary general meetings

In terms of individual share price movement, British e-commerce company THG fell 6.4% to the bottom of the Stoxx 600

German pharmaceutical group Sartorius dropped 5.2% after Societe Generale downgraded the stock and cut its target price, citing increasing costs

At the top of the index, French utility EDF climbed 6% after French Prime Minister Jean Castex said Thursday that February’s electricity price increase would be capped at 4%