Stocks opened lower on Wall Street Wednesday, following declines in oil and European stocks as investors fretted over weak Chinese growth data and an unexpected rise in UK inflation.

Markets continued to be undermined by a realisation that interest rates won’t be coming down as fast as presumed during the rally late last year.  

“In addition to concerns about China, which is a big market for German exports, investors are starting to wake up to the reality that the European Central Bank may not cut interest rates as soon as much as the markets have been pricing in recent months,” said Fawad Razaqzada, market analyst at FOREX.com. 

China’s economy, the world’s second biggest after the United States, grew last year at one of its slowest paces in more than three decades.

China’s National Bureau of Statistics said that gross domestic product expanded 5.2 percent, in line with official targets.

However, the headline numbers hid some worrying developments reported elsewhere, such as a declining population and falling house prices. 

Meanwhile, official data showing UK annual inflation inched up to 4.0 percent in December from 3.9 percent the previous month confounded market forecasts of a slight reduction.

It dashed hopes the Bank of England would cut interest rates in the first half of 2024, boosting the pound against the dollar and euro.

While Britain was never part of the eurozone, the UK numbers added to global sentiment that markets got ahead of themselves last year in expecting imminent rate cuts from the US Federal Reserve and European Central Bank (ECB). 

The ECB could start cutting interest rates, President Christine Lagarde said Wednesday, but likely not before the summer and she stressed that any such move would depend on economic data.

“Enthusiasm about possible near-term rate cuts has been tempered further by European Central Bank President Lagarde, who echoed recent comments by other central bankers, saying rate cuts are likely to begin this summer,” said Briefing.com.

Key figures around 1430 GMT

New York – Dow: DOWN 0.3 percent at 37,234.64

New York – S&P 500: DOWN 0.8 percent at 4,729.02

New York – Nasdaq: DOWN 1.2 percent at 14,759.60

London – FTSE 100: DOWN 1.8 percent at 7,420.10 points

Paris – CAC 40: DOWN 1.4 percent at 7,292.80

Frankfurt – DAX: DOWN 1.2 percent at 16,372.57 

EURO STOXX 50: DOWN 1.3 percent at 4,389.05

Tokyo – Nikkei 225: DOWN 0.4 percent at 35,477.75 (close)

Hong Kong – Hang Seng Index: DOWN 3.7 percent at 15,276.90 (close)

Shanghai – Composite: DOWN 2.1 percent at 2,833.62 (close)

Pound/dollar: UP at $1.2648 from $1.2635 on Tuesday

Euro/pound: DOWN at 85.88 pence from 86.07 pence

Euro/dollar: DOWN at $1.0862 from $1.0879

Dollar/yen: UP at 147.95 yen from 147.18 yen

West Texas Intermediate: DOWN 2.2 percent at $70.83 per barrel

Brent North Sea Crude: DOWN 1.9 percent at $76.79 per barrel