Global stocks follow Wall Street’s fall on rate hike expectations

Global stocks were down on Thursday, following a broad decline on Wall Street as investors braced for higher interest rates and inflation concerns for some time.

France’s CAC 40 fell 1.6% to 6,025.93 in early trading, while Germany’s DAX fell 1.6% to 12,633.32.

Britain’s FTSE 100 fell 1.6% to 7,164.45. US stocks are expected to decline, with Dow futures falling 0.6% to 31,350.00 and S&P 500 futures down nearly 0.8% to 3,926.00.

Benchmarks ended lower in Asia. Japan’s benchmark Nikkei 225 fell 1.5% to end at 27,661.47.

The Australian S and P/ASX 200 fell 2.0% to 6,845.60. The South Korean Kospi fell 2.3% to 2,415.61.

Hong Kong’s Hang Seng fell 1.8% to 19,597.31, while the Shanghai Composite fell 0.5% to 3,184.98. Oil prices have fallen.

The Nikkei’s fall came despite signs of improvement in the Japanese economy. A Finance Ministry study of corporate financial statements for April-June showed a 17.6% improvement over the same period a year earlier.

At some point, central banks will discover that inflation remains high despite their interest rate hikes and they will stop. Unfortunately, for Main Street’s economy, that point is too far away. It’s hard to see a near-term end in sight for heightened consumer and business caution across Europe, China and the United States, said Clifford Bennett, chief economist at ACY Securities.

The latest decline in equities came as Treasury yields rose broadly. The 10-year Treasury yield, which influences interest rates on mortgages and other consumer loans, rose to 3.17% from 3.11% on Tuesday evening.

Bond yields rose alongside expectations of higher interest rates, which the Federal Reserve raised in a bid to crush the highest inflation in decades.

The last time equities mounted a big rally was in July and early August, when bond yields hit their highs as expectations for higher rates eased. Rising interest rates have also hurt investment prices, especially for more expensive stocks such as technology companies.

Traders are now trying to better understand how far and how fast the Fed rate hikes will go. The Fed has already raised interest rates four times this year and is expected to raise short-term rates another 0.75 percentage points at its September meeting, according to CME Group.

In energy trading, benchmark U.S. crude fell $1.34 to $88.21 a barrel. Brent crude, the international standard, slipped $1.40 to $94.24 a barrel.

In currency trading, the US dollar fell from 139.04 yen to 139.21 yen. The Euro traded at $1.0038, down from $1.0054.

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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