Global stock markets dip as Fed hints rate hike

Published On: April 12, 2022Categories: Stocks & Shares1.6 min read

FTSE 100 fell 0.3% to 7,648.81, DAX shed 0.5% to 14,220.99, the future for the S&P 500 index was off 0.4% and that for the DJIA was down 0.1%, Shanghai Composite Index lost 2.6% to 3,167.13

Global stock markets and Wall Street futures sank Monday after the Federal Reserve indicated it might raise interest rates more aggressively to cool US inflation and President Emmanuel Macron emerged from the first round of France’s election facing a challenge from the far right.

London and Frankfurt opened lower. Shanghai, Tokyo and Hong Kong retreated. Oil fell more than $2 per barrel on concern global economic growth might weaken.

Investors are uneasy about higher interest rates, Russia’s war on Ukraine and China’s effort to contain coronavirus outbreaks.

Fed officials indicated in notes from last month’s meeting they were considering raising the US benchmark rate by double the normal amount at upcoming meetings. They also indicated they may shrink the Fed’s bond holdings, which might push up commercial borrowing rates.

Investors see ‘increasing evidence the Federal Reserve will take a more committed approach’ to fighting inflation, said Stephen Innes of SPI Asset Management in a report.

In early trading, the FTSE 100 in London fell 0.3% to 7,648.81 and Frankfurt’s DAX shed 0.5% to 14,220.99.

The CAC 40 in Paris advanced 0.7% to 6,593.24 after Macron said his battle with challenger Marine Le Pen of the National Rally for the April 24 second round of voting will be a hard fight. The two were finalists in the last presidential election five years ago.

Markets are looking to a volatile two weeks before the final result is known, Charlotte de Montpellier and Antoine Bouvet of ING said in a report.

On Wall Street, the future for the benchmark S&P 500 index was off 0.4% and that for the Dow Jones Industrial Average was down 0.1%.

On Friday, the S&P 500 lost 0.3% and the Dow rose 0.4%. The Nasdaq composite fell 1.3%.

In Asia, the Shanghai Composite Index lost 2.6% to 3,167.13 after inflation accelerated to 1.5% over a year ago in March from the previous month’s 0.9% amid upward pressure on global prices due to uncertainty about Russia’s war on Ukraine.

Inflation ‘may limit the space to cut interest rates’ to shore up Chinese economic growth, said Nomura analysts in a report.

About the Author: Jonathan Adams

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