US open: Markets open lower as US PPI falls flat

Markets opened lower on Tuesday, as investors remained cautious ahead of the Federal Open Market Committee’s two-day policy meeting.

The producer price index (PPI) in the US was unchanged in August, in line with the consensus estimate, while the core PPI rose 0.1%. Analysts believe the figures to be an indication of muted inflation pressures, meaning the Federal Reserve is unlikely to hurry its decision over whether to raise interest rates.

The headline PPI was dampened by a 0.5% decline in food prices and 1.5% dip in energy prices, while the personal consumption PPI rose of 0.1 percentage points.

In corporate news, Tesla Motors rose slightly after suffering a significant dip on Monday as Morgan Stanley said its stock was overvalued.

Majesco Entertainment plunged as it was still struggling to recover from a drop late on Monday, when the video game maker announced larger than expected three quarter loss.

Treasury prices climbed, as the rate on 10-year German debt dropped 0.03% to 1.4% and yields on UK bonds of similar maturity lost two basis points to 2.52%.

Oil price rose slightly, with West Texas Intermediate Crude gaining 0.5% and trading at $93.4 a barrel.

The uncertainty surrounding the outcome of the Scottish independence referendum continues to affect the British and European markets, with UK inflation easing 10 basis points to 1.5% in August, while house price growth surged in July at the fastest annual pace in seven years.

The dollar registered a slight gain against the pound but was behind against both euro and yen, while the ruble fell even further behind, losing as much as 1.4% against the US currency.

Meanwhile, the Ukrainian government has ratified a deal with the European Union, granting Kiev full access to the EU market for its own exports, though Ukraine will not lift the current restriction on imported goods from the EU until 2016.

Kiev also approved two bills giving special status to the country’s two easternmost regions, which will be granted a larger degree of power for the next three years.