San Francisco Frontiers - Markets mixed as industrial production up, Fed minutes awaited

Wall Street stocks were mostly higher early Wednesday after the Federal Reserve announced industrial production rose by 1.0 percent in July, after two straight months of decline, lifted by a 5.2 percent rise in the production of motor vehicles and parts.

"The industrial data comes a day after retail sales also overshot expectations," according to Fawad Razaqzada, market analyst for City Index and FOREX.com, adding it gave major US stock averages "a bit of a bounce".

The eurozone's industrial production data was also "surprisingly strong", with 0.5 percent growth month-on-month in June, Razaqzada said.

"Good data is not necessarily good news for stocks," he warned, adding that for the US "it increases the likelihood" the Fed would continue its rate hike policy.

Awaiting hints about the Fed rate policy, European markets closed mixed with Paris down 0.10 percent, London down 0.44 percent but Frankfurt up 0.14 percent.

The British pound strengthened on the release of inflation data showing it had dipped to a 15-month low. Still, the UK still has the highest rate of inflation among G7 nations, and the drop might not be enough to prevent another rate hike next month.

"The result will likely elicit only a slight sense of relief in the government and at the Bank of England," said Richard Flax, Moneyfarm chief investment officer.

The focus for the remainder of Wednesday will be the release of minutes from the US Federal Reserve's July policy meeting, which investors will be scouring for insight on the bank's interest rate outlook.

Comments by Minneapolis Fed president Neel Kashkari on Tuesday also added to concerns that the US central bank is not yet done with rate hikes in its battle to tame inflation.

While inflation may be moving in the right direction, it is still higher than the Federal Reserve would like and it is too early to declare victory, said Kashkari, a member of the Fed's interest-rate-setting committee.

- Banks cut China forecasts -

Asian markets were well in the red, with Tokyo, Hong Kong, Seoul and Sydney all closing down more than 1.0 percent.

"Most Asian stocks experienced declines due to further deteriorating economic conditions in China," said Stephen Innes of SPI Asset Management.

"These concerns were exacerbated by resurfacing anxieties about a more aggressive stance from the US Federal Reserve, causing a wholesale lack of interest in high-risk assets."

Figures released Wednesday by China's National Bureau of Statistics showed new home prices declined for a second month in July in a further indication of the problems facing the deeply indebted property sector and the wider economy.

The data comes on top of a raft of weaker-than-expected figures on Tuesday showing slowing growth in retail sales and industrial production.

Several banks slashed their growth forecasts for China, with JPMorgan Chase cutting its estimate for 2023 to 4.8 percent, well below a May forecast of 6.4 percent, Bloomberg reported.

The recent data suggests China may struggle to achieve its official five-percent growth target set for the year.

The economy grew just 0.8 percent between the first and second quarters of 2023, according to official figures.

- Key figures around 1545 GMT -

New York - Dow: UP 0.2 percent at 35,031.81 points

London - FTSE 100: DOWN 0.4 percent at 7,356.88 (close)

Frankfurt - DAX: UP 0.1 percent at 15,789.45 (close)

Paris - CAC 40: DOWN 0.1 percent at 7,260.25 (close)

EURO STOXX 50: DOWN 0.1 percent at 4,284.27 (close)

Hong Kong - Hang Seng Index: DOWN 1.4 percent at 18,329.30 (close)

Shanghai - Composite: DOWN 0.8 percent at 3,150.13 (close)

Tokyo - Nikkei 225: DOWN 1.5 percent at 31,766.82 (close)

Euro/dollar: DOWN at $1.0900 from $1.0905 at 2050 GMT on Tuesday

Pound/dollar: UP at $1.2744 from $1.2704

Euro/pound: DOWN at 85.50 pence from 85.82 pence

Dollar/yen: UP at 145.86 from 145.57 yen

West Texas Intermediate: UP 0.1 percent at $81.21 per barrel

Brent North Sea crude: UP 0.2 percent at $85.07 per barrel

A.Smith--SFF