TOKYO (AP) – Global shares retreated yesterday, tracking losses on Wall Street after United States (US) Federal Reserve Chair Jerome Powell indicated increases in interest rates must be faster to fight inflation.
Most major indexes declined, though Shanghai edged higher after authorities there promised to ease anti-virus controls. Oil prices fell more than USD2 a barrel.
Investors are watching for developments in Ukraine and a presidential runoff election in France this weekend.
France’s CAC 40 slipped 1.2 per cent in early trading to 6,632.23, while Germany’s DAX fell 1.2 per cent to 14,334.63.
Britain’s FTSE 100 shed 0.5 per cent to 7,590.47. The futures for the Dow industrials and S&P 500 slipped 0.2 per cent.
In Asian trading, Japan’s benchmark Nikkei 225 dipped 1.6 per cent to finish at 27,105.26.
Australia’s S&P/ASX 200 dropped 1.6 per cent to 7,473.30. South Korea’s Kospi shed 0.9 per cent to 2,704.71. Hong Kong’s Hang Seng slipped 0.2 per cent to 20,638.52, while the Shanghai Composite recouped earlier losses to edge up 0.2 per cent to 3,086.92.
Japanese Finance Minister Shunichi Suzuki made comments seen as a slightly more forceful pushback against “sudden movements” in exchange rates after meeting with Treasury Secretary Janet Yellen. The US dollar rose to JPY128.45 from JPY128.36. The euro cost USD1.0801, inching down from USD1.0840.
In a panel discussion held by the International Monetary Fund, Fed Chair Jerome Powell said the Fed must move faster to tackle high inflation, which suggests sharp interest rate increases are likely in coming months.
The S&P 500 reversed direction after that, losing 1.5 per cent, while the Dow Jones Industrial Average fell one per cent and the Nasdaq slid 2.1 per cent. The Russell 2000 small caps index gave up 2.3 per cent.
The Fed has already announced a quarter-percentage point rate hike and Wall Street expects a half-percentage rate hike at its next meeting in two weeks. Other central banks have also moved to raise interest rates to try and temper the impact of rising prices on businesses and consumers.
Powell suggested that “there’s something in the idea of front-loading” aggressive rate hikes as the Fed grapples with inflation that has reached a four-decade high.
That suggests a half-point rate increase could be on the table when Fed officials hold their next interest rate and economic policy meetings on May 3-4, Powell said.
In the past, the Fed has typically raised its benchmark short-term rate by more modest quarter-point increments.
