Global market update: Wall Street, European Stoxx 600 weighed down by inflation jitters

Global market update: Following a bruising session in Asian stock market, US stock market feel the heat of US inflation jitters. Dow Jones index added 0.12 per cent, S&P 500 indeex lost 0.50 per cent whereas tech heaby weight Nasdaq crashed 1.23 per cent on Friday. European Stoxx 600 index nosedived 0.98 per cent whereas MSCI's broadest index of global equities fell 0.3 per cent.

In Asia, where markets are caught between worries of higher dollar borrowing costs and a slowdown in China's economy, MSCI's index of equities outside Japan fell 1.2% as it remained in negative territory for the year-to-date.

Data on Friday showed China's consumer prices were flat in September, while factory-gate prices shrank at a slower pace, indicating deflationary pressures persist. Japan's Nikkei was 0.53% lower.

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Highlighting the reason for dip in global stock markets, Ryan Brandham, Head of Global Capital Markets, North America at Validus Risk Management said, "The hawks calling for at least another (Fed) hike will be supported based on these numbers."

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"Much of the good work done in the past week in the form of bull flattening of the US yield curve has been undone by the latest U.S. CPI report," said Ray Attrill, head of FX strategy at National Australia Bank.

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Data on Thursday showed an increase in U.S. consumer prices in September including a surprise surge in rental costs, an indicator closely watched by economists for signs above-target inflation has become embedded in the economy.

Futures markets reflected about a 40% probability of a US rate hike in December, compared with about a 28% chance seen before Thursday's consumer prices report.

Inflation reports from Sweden, Spain and France are due later on Friday.

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The US inflation report along with poor demand for an auction of US 30-year bonds sent Treasury yields higher on Thursday.

The week's sharp escalation of Middle East tensions also ensured the mood remains cautious across markets. In a speech in Beijing on Friday, European Union foreign policy chief Josep Borrell called for Europe, China and the United States to work together to resolve the conflict. Israel's foreign ministry also announced it was "deeply disappointed" China had not yet condemned last weekend's attacks by Hamas.

The risk-off mood also prevailed in the currency market, with the dollar holding on to most overnight gains. Against a basket of currencies, the dollar eased 0.07% to 106.40, having gained 0.8% overnight.

(With inputs from Reuters)

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