Global Shares Decline on Worries Over Inflation
Global shares and Wall Street futures sank on Monday. After the Federal Reserve said, it might raise interest rates more aggressively to reduce U.S. inflation. President Emmanuel Macron has emerged from the first round of French elections facing a far-right challenge. London and Frankfurt opened at a small level. Tokyo, Shanghai, and Hong Kong retreated. Oil fell by more than $2 a barrel as global economic growth may weaken. Investors are worried about high-interest rates, Russia’s war with Ukraine, and China’s attempt to curb the spread of the coronavirus.
Federation officials indicated in a note at last month’s meeting that they were considering doubling the U.S. benchmark rate to an average amount in future sessions. They also noted that the ownership of the federation’s bonds could be reduced, leading to higher interest rates on commercial loans. Investors see growing evidence that the Federal Reserve will take a more committed approach to fight inflation.
The FTSE 100 in London fell 0.3% to 7,644.69, while the DAX lost 0.3% to 14,241.45. CAC 40 advanced 0.7% after Macron said his fight with a rival would be tough for the second round. They were finalists in the last presidential election five years ago. Markets experience volatility two weeks before the final result is announced. On Wall Street, the next S&P 500 Index is up 0.4%, While for the Dow Jones Industrial Average, it was 0.2%. On Friday, the S&P 500 lost 0.3%. The Dow rose 0.4%. Nasdaq Composite was down 1.3%.
Inflation and Global Stocks
Higher interest rates typically deter economic activity and make safer assets, such as bonds more attractive. And makes stocks more risky and expensive. After being accused of reacting to rising inflation, some worry that the Fed may push too hard and put the world’s largest economy into recession. Last week, Deutsche Bank economists a U.S. recession by the point of next year.
In March, the Shanghai Composite Index lost 2.6% after inflation accelerated to 1.5% a year earlier, from 0.9% a month earlier; Amid pressure on global prices due to uncertainty about Russia’s war with Ukraine. Inflation may limit the room for interest rate cuts “to boost China’s economic growth. Also, in China, automakers and other manufacturers are reducing production due to supply disruptions after the authorities tightened control to stop coronavirus outbreaks in Shanghai and other cities.
BYD fell 4.5%, while Dongfeng Motor Group fell. By 3.6%. Technology firms also deny reports of further regulatory raid plans in the industry. The Nikkei 225 fell 0.6%. Hang Seng experienced a 3% reversal. The S&P-ASX 200 in Sydney advanced 0.1%. Sensex lost 0.5%. Singapore and New Zealand declined, while Indonesia advanced. Oil prices fell due to weak demand expectations; After reaching a high of $130 a barrel last month.
ACM Research, a semiconductor industry equipment supplier, based in Shanghai, fell 6.1% on Friday; restrictions significantly impacted revenue. The price of U.S. oil in electronic trading on the New York Mercantile Exchange fell by $2.32 to $95.94 per barrel. The dollar rose to 125.33 yen on Friday. The euro remained unchanged at $1.0906.