New York (AFP) – Global stock markets mostly fell on Wednesday as fresh strikes in the Middle East, a jump in US inflation, and a tech sell-off weighed on sentiment. After mostly shrugging off the inflation report, the selloff accelerated on Wall Street, with all three major indices finishing sharply lower and the Dow off nearly two percent. The declines reflected “profit-taking in technology after a very strong two-month rally,” said Angelo Kourkafas from Edward Jones. “I don’t think anything fundamental has changed in terms of the artificial intelligence outlook and spending but it’s more so (…) a natural pullback.”
Data showed US consumer inflation surged to a three-year high in May, hitting 4.2 percent year-on-year. The increase, up from April’s 3.8 percent figure, follows strong US jobs figures last week that ramped up expectations for a rate hike. Analyst Stephen Innes noted that the data was not as worrying as it first appears. While the headline figure jumped, the core reading that excludes energy prices — which have surged due to war in the Middle East — held steady at 2.9 percent. “The inflation fire is burning, but it has not yet jumped every fence in the neighborhood,” he said.
Besides the inflation data, markets digested the latest military back-and-forth between the United States and Iran. US President Donald Trump vowed to “hit them again hard today” after Iran downed a US helicopter, further dimming the prospects for a peace deal that could reopen the Strait of Hormuz to oil tanker traffic. Investors have also started worrying more recently about the risk of a hike in US interest rates. New Federal Reserve Chair Kevin Warsh will preside over his first rate-setting meeting of the central bank’s policymakers next week. Investors see no chance of a rate hike next week, according to the CME FedWatch tool, but that rises to roughly a third in September.
Technology shares led declines across Asia as investors weighed lofty valuations and concerns about persistent inflation. European equities mostly followed Asia lower. Oil prices climbed about two percent. “The oil market is trading on hope that a resolution can be found, and on a loosening of oil supply,” said Kathleen Brooks, research director at trading group XTB. She noted that declining onshore Middle Eastern oil inventories suggest “a significant amount” of oil is leaving the Gulf, although exports remain well below pre-war levels as the Strait of Hormuz remains largely blocked. “This supply boost explains why the oil price is not surging on the latest outbreak of fighting in the Gulf,” she said.
Data from the maritime tracking firm Kpler showed Wednesday that the first Europe-bound oil tanker managed to get out of the Gulf at the end of last month.
– Key figures at around 2015 GMT –
New York – DOW: DOWN 1.9 percent at 49,918.90 (close)
New York – S&P 500: DOWN 1.6 percent at 7,267.00 (close)
New York – Nasdaq Composite: DOWN 2.0 percent at 25,169.50 (close)
London – FTSE 100: UP 0.3 percent at 10,254.81 (close)
Paris – CAC 40: DOWN 0.5 percent at 8,161.83 (close)
Frankfurt – DAX: DOWN 1.0 percent at 24,195.31 (close)
Tokyo – Nikkei 225: DOWN 1.9 percent at 64,179.27 (close)
Hong Kong – Hang Seng Index: DOWN 0.6 percent at 24,407.96 (close)
Shanghai – Composite: DOWN 0.4 percent at 3,993.23 (close)
Euro/dollar: UP at $1.1545 from $1.1543 on Tuesday
Pound/dollar: DOWN at $1.3376 from $1.3380
Dollar/yen: UP at 160.52 yen from 160.36 yen
Euro/pound: UP at 86.31 pence from 86.27 pence
West Texas Intermediate: UP 2.1 percent at $90.03 a barrel
Brent North Sea Crude: UP 1.8 percent at $93.10 a barrel
© 2024 AFP
