Global stocks lower after Wall St steadies amid rate fears

BEIJING: Major global stock markets were mostly lower Thursday amid worries about more US interest rate hikes.

London, Shanghai and Frankfurt declined. Tokyo advanced. Oil prices were lower.

Wall Street futures were lower following Federal Reserve chair Jerome Powell's warning that rate hikes might speed up because upward pressure on prices is stronger than expected.

Investors worry the Fed and other central banks look increasingly likely to tip the global economy into at least a brief recession to extinguish stubborn inflation. US inflation edged up in January to 5.4 per cent, well above the Fed's target of 2 per cent.

“The risks of a higher and faster hike trajectory have risen,'' Stephen Innes of SPI Asset Management said in a report. He said the Fed might be motivated by “mounting criticism” that it has “fallen behind the inflation curve.'' In early trading, the FTSE 100 in London lost 0.6 per cent to 7,884.12 and the DAX in Frankfurt retreated 0.2 per cent to 15,601.90. The CAC 40 in Paris declined 0.4 per cent to 7,295.79.

On Wall Street, the future for the benchmark S&P 500 index was 0.2 per cent lower. That for the Dow Jones Industrial Average was off 0.1 per cent.

On Wednesday, the S&P 500 rose 0.1 per cent, recovering some of the previous day's loss. The Dow fell 0.2 per cent and the Nasdaq composite added 0.4 per cent.

In Asian trading, the Shanghai Composite Index lost 0.2 per cent to 3,276.09 after Chinese inflation decelerated in February to 1 per cent over a year earlier from the previous month's 2.5 per cent. The Hang Seng in Hong Kong shed 0.6 per cent to 19,925.74.

The Nikkei 225 in Tokyo gained 0.6 per cent to 28,623.15 after the government cut its estimate of economic growth in the three months ending in December to 0.1 per cent from a previous estimate of 0.6 per cent.

The Kospi in Seoul sank 0.5 per cent to 2,419.09 and Sydney's S&P-ASX 200 was up less than 0.1 per cent at 7,311.10.

India's Sensex sank 0.8 per cent to 59,873.04. New Zealand and Singapore declined while Jakarta and Bangkok rose.

Powell said Wednesday that Fed policymakers want to see more data before deciding on future rate hikes.

A report Wednesday showed the number of job openings advertised across the country last month was higher than expected. Traders scrutinise such data for clues about wages, one factor the Fed looks at in trying to forecast inflation.

The report also showed some signs of easing pressure, including fewer Americans quitting their jobs.

A separate report Wednesday suggested hiring is still stronger across US private employers than expected.

The US government's more comprehensive monthly report on hiring is due out Friday.

Other data showed strong US consumer spending, another factor policymakers worry might push up prices.

Expectations for a firmer Fed have been most clear in the bond market, where yields have shot higher.

The yield on the 10-year Treasury, or the difference between its market price and the payout at maturity, ticked up to 3.98 per cent from 3.97 per cent late Tuesday.

The yield on the two-year Treasury rose to 5.05 per cent from 5.02 per cent. It's near its highest level since 2007.

Yields on shorter-term Treasurys are above those for Treasurys that pay off further in the future. Wall Street sees that as a fairly reliable indicator of an impending recession.

In energy markets, benchmark US crude lost 23 cents to USD 76.43 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 92 cents on Wednesday to USD 76.66. Brent crude, the price basis for international oil trading, gave up 34 cents to USD 82.32 per barrel in London. It retreated 63 cents the previous session to USD 82.66.

The dollar declined to 136.41 yen from Wednesday's 137.24 yen. The euro gained to USD 1.0556 from USD 1.0545.