Equity markets are suffering a Christmas chill owing to concerns about rising interest rates and a possible recession

London (AFP) - US and European stocks fell on Friday despite a key gauge showing inflation to be slowing, as investors remain concerned about recession risks.

Equities had fallen on Thursday as data showed the US economy grew a lot more in July-September than first thought, while jobless claims rose less than expected last week.

The readings suggested that despite almost a year of rate hikes and decades-high inflation, activity remained strong and the US Federal Reserve has much more work to do to rein in inflation.

The Fed has made clear it is willing to push the US economy into recession to bring inflation back down.

On Friday, data showed the US Federal Reserve’s preferred inflation measure, the personal consumption expenditures (PCE) price index, rose 5.5 percent last month from November 2021, Commerce Department data showed.

That represents a decline from the annual 6.1-percent rise registered in October.

Meanwhile, personal income increased 0.4 percent month-on-month, but personal spending edged up only 0.1 percent.

“The key takeaway from the report is that real spending was flat while the inflation rates were still too high for the Fed’s liking, making for an offputting stagflation mix,” said market analyst Patrick O’Hare at Briefing.com.

Wall Street’s main stock indices fell further at the opening bell on Friday.

The Dow shed 0.1 percent, while the broader S&P 500 gave up 0.2 percent and the tech-heavy Nasdaq fell 0.3 percent.

Meanwhile, data showed US durable goods orders dropped 2.6 percent in November, but that was primarily due to a sharp decline in highly volatile aircraft orders. Excluding transportation, new orders held firm with a 0.2-percent gain.

Frankfurt and Paris failed to hold onto gains in afternoon trading. London, which closed earlier in a shortened trading day, posted minor gains.

Asia’s main stock markets fell after Wall Street ended well in the red on Thursday.

Tokyo’s main stocks index shed one percent as Japan’s inflation hit a 41-year high, reinforcing expectations that the country’s central bank would lift interest rates next year.

The yen surged this week after the Bank of Japan tweaked monetary policy, in a surprise move that hinted at future rate hikes.

Hopes meanwhile that China’s growth will surge as it rolls back its zero-Covid strategy have been dashed by a surge in cases across the country that has kept people at home, and battered travel and economic activity.

“The spike in Covid-19 infection rates following the easing of mobility restrictions will still constrain economic activity in the December-January time frame,” said Guan Yi Low of M&G Investments.

Expectations that demand for crude oil will pick up in the new year, as well as a drop in US stockpiles, were providing healthy support to the commodity, with both main contracts up more than two percent Friday.

Supply concerns spiked after a senior official warned Friday that Russia could cut up to seven percent of its oil production next year as it follows through on a vow not to sell crude to nations implementing an international price cap over Moscow’s invasion of Ukraine.

- Key figures around 1430 GMT -

London - FTSE 100: UP 0.1 percent at 7,473.01 points (close)

Frankfurt - DAX: DOWN less than 0.1 percent at 13,908.02

Paris - CAC 40: DOWN 0.4 percent at 6,489.99

EURO STOXX 50: DOWN 0.4 percent at 3,807.78

New York - DOWN 0.1 percent at 32,981.52

Tokyo - Nikkei 225: DOWN 1.0 percent at 26,235.25 (close)

Hong Kong - Hang Seng Index: DOWN 0.4 percent at 19,593.06 (close)

Shanghai - Composite: DOWN 0.3 percent at 3,045.87 (close)

Dollar/yen: UP at 132.95 yen from 132.36 yen on Thursday

Euro/dollar: UP at $1.0610 from $1.0598

Pound/dollar: UP at $1.2045 from $1.2036

Euro/pound: UP at 88.08 pence from 88.02 pence

Brent North Sea crude: UP 2.7 percent at $83.15 per barrel

West Texas Intermediate: UP 2.9 percent at $79.77 per barrel