Global shares fall amid interest rate, earnings worries
TOKYO — European stocks declined Monday, tracking losses in Asia as worries over interest rate hikes dominated an array of investor concerns. The Shanghai Composite index fell 5.1%, while Hong Kong fell 3.7%. This was due to China’s stringent pandemic policies and rising case numbers.
Oil prices slipped more than $4 per barrel, and the U.S. dollar was trading near 128 Japanese yen.
France’s CAC 40 dropped 2.0% in early trading to 6,451.27. The news that Emmanuel Macron won over the weekend’s French presidential election, clinching a second term, reassured markets about France’s ability to maintain its course in the midst the conflict in Ukraine.
But, the strong showing by Marine Le Pen, a populist nationalist, served to remind markets of how fragile this situation might be. Le Pen promised to thwart France’s ties with NATO, the EU and Germany and he also spoke out against EU sanctions regarding Russian energy supplies.
Germany’s DAX lost 1.4% to 13,943.88. Britain’s FTSE 100 shed 2.2% to 7,354.94. The future for the Dow industrials was down 0.7% while that for the S&P 500 fell 0.8%.
In Asian trading, Japan’s benchmark Nikkei 225 lost 1.9% to finish at 26,590.78. South Korea’s Kospi slipped 1.8% to 2,657.13. Hong Kong’s Hang Seng dropped 770 points to 19,869. 34, while the Shanghai Composite shed 158 points to 2,928. 51, dipping below 3,000 for the first time since July 2020.
Hong Kong shares traded in Internet company Baidu fell 7% while PetroChina lost 4.4% due to falling oil prices. “After the sell-off on Wall Street last week, the overall risk appetite in this region may also come under pressure,” Yeap Jun Rong (market strategist at IG) in Singapore.
Rising COVID-19 cases in China are setting off worries about more pandemic lockdowns that would crimp economic recoveries in the region. After rising case numbers, Beijing imposed lockdowns across several districts.
Investors are also watching profit reports from companies, including Japanese big names that are coming in weeks ahead. Many reports from U.S. businesses have been released and have been disappointing. This contributed to the decline that ended last week at Wall Street.
Investors are focused on what the U.S. Federal Reserve might do. The Federal Reserve chair has indicated that the central bank could raise short-term interest rates by twice the usual amount at its next meetings, which will begin in two weeks. The Fed has already raised its key overnight rate once, the first such increase since 2018.
Markets around the globe are feeling the same pressure on rates, inflation, especially in Europe, as the war in Ukraine pushes up food, oil, and gas prices.
In energy trading, benchmark U.S. crude lost $4. 71 to $97. 36 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude oil, the international standard fell $4. 86 to $101. 29 a barrel.
In currency trading, the U.S. dollar edged down to 128. 11 Japanese yen from 128. 59 yen. The euro cost $1. 07444, down from $1.0803.
Yuri Kageyama is on Twitter https://twitter.com/yurikageyama
I have been writing professionally for over 20 years and have a deep understanding of the psychological and emotional elements that affect people. I’m an experienced ghostwriter and editor, as well as an award-winning author of five novels.