Global markets fall, roiled by U.S. inflation, rate adjustment fears

Global markets tanked on Monday with the dollar touching its peak in two decades as high U.S. inflation data stoked concerns that central banks will further raise rates.

At 5.20 am ET, U.S. Dow Jones futures fell 1.9 per cent, while S&P 500 futures slipped by about 2.3 per cent. Nasdaq futures slid 2.9 per cent.

The U.S. consumer price index quickened by 8.6 per cent last month, strengthening the possibility that the Federal Reserve could take an aggressive approach to tame price increases.

The weight of the plunge was heaviest in Asia, where Japan’s Nikkei dropped 3 per cent and the yen plummeted to the weakest level in over 20 years. It has declined steeply in recent months on account of a strong dollar and steeply loose monetary policy in the East Asian nation.

On Friday, the Japanese central bank and government had released a joint statement warning of dramatic slide in the currency, implying a possible meddling aimed at arresting the dive by Tokyo.

Apart from the yen, Asian currencies like the Indian rupee also crashed to a record low of 78.2 against the greenback in early trade.

So also did Hong Kong’s Hang Seng which saw a pullback of 3.4 per cent while South Korea’s Kospi cringed by 3.5 per cent and China’s Shanghai Composite by 0.9 per cent.

In Europe, France’s CAC 40 eased by 2.5 per cent in early trade, while Germany’s DAX 30 was 2.3 per cent weaker. The FTSE 100 decelerated by 1.8 per cent as the British pound slumped to $1.22 after fresh data revealed the UK economy shrinking by for the second quarter in a row in April.

“The hangover from Friday’s US CPI data isn’t helped by concern about China walking back some of its economic reopening, or more dire economic data in the UK,” Societe Generale strategist Kit Juckes said in a research note.

In Thursday, authorities in Beijing’s biggest district Chaoyang declared closure of entertainment centres days after allowing them to reopen, as the country’s Covid resurgence appears to worsen.

Global markets tanked on Monday with the dollar touching its peak in two decades as high U.S. inflation data stoked concerns that central banks will further raise rates.

At 5.20 am ET, U.S. Dow Jones futures fell 1.9 per cent, while S&P 500 futures slipped by about 2.3 per cent. Nasdaq futures slid 2.9 per cent.

The U.S. consumer price index quickened by 8.6 per cent last month, strengthening the possibility that the Federal Reserve could take an aggressive approach to tame price increases.

The weight of the plunge was heaviest in Asia, where Japan’s Nikkei dropped 3 per cent and the yen plummeted to the weakest level in over 20 years. It has declined steeply in recent months on account of a strong dollar and steeply loose monetary policy in the East Asian nation.

On Friday, the Japanese central bank and government had released a joint statement warning of dramatic slide in the currency, implying a possible meddling aimed at arresting the dive by Tokyo.

Apart from the yen, Asian currencies like the Indian rupee also crashed to a record low of 78.2 against the greenback in early trade.

So also did Hong Kong’s Hang Seng which saw a pullback of 3.4 per cent while South Korea’s Kospi cringed by 3.5 per cent and China’s Shanghai Composite by 0.9 per cent.

In Europe, France’s CAC 40 eased by 2.5 per cent in early trade, while Germany’s DAX 30 was 2.3 per cent weaker. The FTSE 100 decelerated by 1.8 per cent as the British pound slumped to $1.22 after fresh data revealed the UK economy shrinking by for the second quarter in a row in April.

“The hangover from Friday’s US CPI data isn’t helped by concern about China walking back some of its economic reopening, or more dire economic data in the UK,” Societe Generale strategist Kit Juckes said in a research note.

In Thursday, authorities in Beijing’s biggest district Chaoyang declared closure of entertainment centres days after allowing them to reopen, as the country’s Covid resurgence appears to worsen.