World stocks followed Wall Street lower Friday as fears spread that U.S. interest rate hikes to fight inflation might stall economic growth.
London and Frankfurt opened lower. Shanghai, Hong Kong and Sydney declined. Tokyo gained as trading resumed after a holiday.
Wall Street futures fell after the benchmark S&P 500 index plunged 3.6% on Thursday as optimism that drove the previous day’s rally evaporated.
Investors worry about whether the Federal Reserve, which raised its key interest rate by a half percentage point on Wednesday, can cool inflation without tipping the U.S. economy into recession. Traders were briefly encouraged by chairman Jerome Powell’s comment that the Fed wasn’t considering even bigger increases.
“Clearly, investors had second thoughts about the so-called ‘dovish hike’ from the Fed,” Rob Carnell of ING said in a report. The likelihood is “rate hikes coming thick and fast, but little if any prospect of a turn in inflation any time soon.”
In early trading, the FTSE 100 in London lost 0.6% to 7,461.01 and Frankfurt’s DAX sank 0.9% to 13,772.99. The CAC 40 in Paris shed 1.1% to 6,296.18.
On Wall Street, futures for the S&P 500 and Dow Jones Industrial Average were up 0.3%.
Also Friday, the U.S. government was due to report employment data.
On Thursday, the Dow lost 3.1% and the Nasdaq slumped 5%.
In Asia, the Shanghai Composite Index fell 2.2% to 3,001.56 and Hong Kong’s Hang Seng plunged 3.8% to 20,001.96. The Nikkei 225 in Tokyo added 0.7% to 27,003.56.
The Kospi in Seoul tumbled 1.2% to 2,644.51 and Sydney’s S&P-ASX 200 lurched down 2.2% to 7,205.60.
India’s Sensex lost 1.5% to 54,880.33. New Zealand and Southeast Asia markets also declined.
Russia’s war on Ukraine, high oil prices and global supply chain disruptions are adding to investor unease.
Also Thursday, the Bank of England raised its benchmark rate to the highest level in 13 years, its fourth hike since December to cool British inflation that is running at 30-year highs.
Oil prices stayed above $100 per barrel despite a decision Thursday by major oil producers to increase exports. European governments are considering an embargo on Russian oil and are trying to line up other supplies in a tight market.
Benchmark U.S. crude gained 96 cents to $109.22 in electronic trading on the New York Mercantile Exchange. The contract rose 45 cents to $108.26 on Thursday. Brent crude, the price basis for international oil trading, advanced 83 cents to $111.73 per barrel in London. It rose 76 cents the previous session to $110.90 a barrel.
The dollar rose to 130.67 yen from Thursday’s 130.40 yen. The euro gained to $1.0574 from $1.0519.
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