Global Stocks and Wall St Futures Fall on Rate Hike Fears

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People wearing face masks walk past a bank’s electronic board showing the Hong Kong stock index in Hong Kong, Friday, May 6, 2022. Asian stocks followed Wall Street’s slide on Friday on fears of that US interest rate hikes to combat inflation could stunt economic growth. (AP Photo/Kin Cheung)

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World stocks continued to slide on Wall Street on Friday as fears spread that US interest rate hikes to combat inflation could stunt economic growth.

London and Frankfurt opened lower. Shanghai, Hong Kong and Sydney all declined. Tokyo gained when trading resumed after a holiday.

Wall Street futures fell after the benchmark S&P 500 index sank 3.6% on Thursday as the optimism that fueled the previous day’s rally evaporated.

Investors are concerned whether the Federal Reserve, which raised its key interest rate by half a percentage point on Wednesday, can cool inflation without tipping the US economy into recession. Traders were briefly buoyed by Chairman Jerome Powell’s comment that the Fed was not considering further hikes.

“Clearly, investors had second thoughts about the Fed’s so-called ‘moderate hike,'” ING’s Rob Carnell said in a report. The probability is that “rate hikes will come quickly, but little or no prospect of a change in inflation in the short term.”

In early trading, London’s FTSE 100 lost 0.6% to 7,461.01 and Frankfurt’s DAX sank 0.9% to 13,772.99. The Paris CAC 40 lost 1.1% to 6,296.18.

On Wall Street, futures for the S&P 500 and the Dow Jones Industrial Average rose 0.3%.

Also on Friday, the US government was due to report employment data.

On Thursday, the Dow lost 3.1% and the Nasdaq plunged 5%.

In Asia, the Shanghai Composite Index fell 2.2% to 3,001.56 and Hong Kong’s Hang Seng slumped 3.8% to 20,001.96. Tokyo’s Nikkei 225 added 0.7% to 27,003.56.

Seoul’s Kospi fell 1.2% to 2,644.51 and Sydney’s S&P-ASX 200 fell 2.2% to 7,205.60.

India’s Sensex lost 1.5% to 54,880.33. New Zealand and Southeast Asian markets also declined.

Russia’s war against Ukraine, high oil prices and global supply chain disruptions are adding to investor concern.

Also on Thursday, the Bank of England raised its benchmark rate to the highest level in 13 years, its fourth increase since December to cool British inflation from 30-year highs.

Oil prices remained above $100 a barrel despite Thursday’s decision by major oil producers to increase exports. European governments are considering an embargo on Russian oil and trying to line up other supplies in a tight market.

Benchmark US 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 base price for international oil trading, rose 83 cents to $111.73 a barrel in London. It rose 76 cents the previous session to $110.90 a barrel.

The dollar rose to 130.67 yen from 130.40 yen on Thursday. The euro rose to $1.0574 from $1.0519.

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