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Wall Street stocks mostly fell after US inflation data exceeded expectations, while the euro strengthened on signs Russia and Ukraine could be closer to a peace agreement.

Major US indices began the day firmly in the red after January US consumer price index (CPI) data showed inflation grew, raising questions about whether the Federal Reserve’s progress on bringing down prices was reversing.

The CPI for all urban consumers rose 0.5% in a month, seasonally adjusted, and rose 3.0% over a year.

“Annual services inflation remained chunky at 4.2%,” ASB economists said today.

“The details showed a broad-based pick-up, with rises for housing, energy, groceries, car insurance, used cars, transportation services, and medical care commodities.”

That raised concerns the Fed would not be cutting rates this year.

“In fact, the next rates move by the Fed could be a hike,” ASB economists added.

While both the Dow and S&P 500 dropped, they finished well above session lows.

The Nasdaq mustered a small gain.

“Equities were a lot more resilient than I would have expected given the news we had this morning,” said Jack Ablin of Cresset Capital.

Still, US Treasury yields advanced, a sign investors see lower odds for Fed interest rate cuts.

“Investors were looking for reassurance in this morning’s inflation report - and they didn’t get it,” said Bret Kenwell, US investment analyst at the trading platform eToro.

He said the “higher-than-expected print further lowers the odds of rate cuts from the Fed this year and stokes investors' reflationary fears.”

Analysts warn that US President Donald Trump’s tariffs - and plans to slash taxes, regulations and immigration - risked reigniting inflation.

“What makes today’s rise in CPI inflation data so precarious is that many believe this is just the beginning, as tariffs could push inflation even higher,” said Jochen Stanzl, chief market analyst at financial services firm CMC Markets.

The dollar initially strengthened after the inflation report, but weakened later against the euro following news Trump held talks with Russian President Vladimir Putin about immediately starting Ukraine peace talks.

Later Wednesday, Ukrainian President Volodymyr Zelenskyy said he had had a “meaningful conversation” with Trump and the leaders discussed ways to end Russia’s nearly three-year invasion of Ukraine.

Ukrainian President Volodymyr Zelenskyy said he had had a "meaningful conversation" with Donald Trump about ending the war. Photo / AFP

However, crude oil prices finished down more than 2%, due in part to expectations for increased Russian oil output.

Heineken fizzes

In Asian markets, Hong Kong led gains thanks to another tech rally.

In Europe, London and Frankfurt hit fresh record highs, with support coming from cuts to interest rates in Britain and the eurozone, as well as positive company earnings.

Shares in Dutch brewer Heineken fizzed as traders cheered better-than-expected beer sales. The stock surged 14%, making it the biggest gainer on the Amsterdam market.

But Chevron fell 1.6% after announcing it will cut 15 to 20% of its workforce as part of a reorganisation to save money and to position the oil giant for the long-term.

Key figures around 10.50 NZT

New York - Dow: DOWN 0.5% at 44,368.56 (close)

New York - S&P 500: DOWN 0.3% at 6,051.97 (close)

New York - Nasdaq: UP less than 0.1 points at 19,649.95 (close)

London - FTSE 100: UP 0.3% at 8,807.44 (close)

Paris - CAC 40: UP 0.2% at 8,042.19 (close)

Frankfurt - DAX: UP 0.5% at 22,148.03 (close)

Tokyo - Nikkei 225: UP 0.4% at 38,963.70 (close)

Hong Kong - Hang Seng Index: UP 2.6% at 21,857.92 (close)

Shanghai - Composite: UP 0.9% at 3,346.39 (close)

Euro/dollar: UP at $1.0387 from $1.0307 on Tuesday

Pound/dollar: UP at $1.2446 from $1.2368

Dollar/yen: UP at 154.39 yen from 152.00 yen

Euro/pound: UP at 83.40 pence from 83.33 pence

West Texas Intermediate: DOWN 2.7% at $71.37 per barrel

Brent North Sea Crude: DOWN 2.4% at $75.18 per barrel

© Agence France-Presse. Additional reporting: NZ Herald