Falling inflation in China could spur interest-rate cut

Concerns about China’s slowdown in August helped spark a selloff in stocks around the world, and sharp swings continued through last month. This presents a dilemma for the Bank of Japan, which has a 2% consumer price inflation target.

“Right now my expectation is, given where I think the economy would go, I wouldn’t expect it would be appropriate to raise rates”, Fed Governor Daniel Tarullo told CNBC when asked if interest rates should rise this year.

The weak September price data released by China Wednesday again highlighted strong deflationary pressure amid lackluster domestic demand.

Sheng Laiyun, spokesman for the National Bureau of Statistics, said last month that third-quarter economic growth will be largely stable as the impact from the stock market slump on the broader economy has been limited. After Tuesday’s closing bell, Intel and JP Morgan Chase delivered mixed quarterly results.

Other companies reporting Wednesday include Bank of America Corp., BlackRock Inc. and Delta Air Lines Inc.

In domestic corporate news, UBS AG has agreed to pay USD19.5 million to settle charges involving structured notes linked to a proprietary foreign exchange trading strategy.

Brent crude oil was down 0.2% at $49.58 a barrel.

Australia’s Treasury Wine Estates has agreed to buy the majority of Diageo PLC’s USA and United Kingdom wine operations for a cash consideration of USD552 million.

Separately, Singapore’s trade ministry reported brighter-then-expected growth figures: The nation’s economy grew 0.1% on year on a seasonally adjusted basis, narrowly missing a technical recession, compared with a 2.5% contraction in the second quarter. Data on factory-gate prices indicated more weakness in the world’s second-largest economy. The UK’s FTSE 100 Index fell 0.5 percent, Germany’s DAX Index shed 0.9 percent, while France’s CAC 40 Index sank 1 percent.

“The big concern is not rising interest rates anymore, it’s slowing growth and corporate profits”, Patrick Spencer, equities vice chairman at Robert W Baird & Co in London, told Bloomberg. The Dow dropped 0.3% to snap a seven-session winning streak, while the tech-heavy Nasdaq slid 0.9% and the S&P 500 fell 0.7%.