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Global stocks higher amid interest rate uncertainty

BEIJING (AP) – Global stock markets were mostly higher yesterday as investors watched for signs of whether central banks will try to cool inflation by speeding up withdrawal of economic stimulus that is boosting share prices.

London and Frankfurt opened higher. Shanghai and Tokyo advanced. Hong Kong declined.
Wall Street futures were higher after the benchmark S&P 500 index sank on Monday on losses for tech and communications companies.

Markets have been uneasy since Federal Reserve officials said in mid-December plans to withdraw record-low interest rates and other stimulus would be accelerated to cool inflation that is at multi-decade highs.

Investors expect the European Central Bank (ECB) to adopt a more hawkish policy for the euro at its March meeting after its board said last week that inflation risks were rising.

The ECB President, Christine Lagarde, tried on Monday to dampen talk of rate hikes, saying any change “will be very gradual”.

The prospect of tighter monetary policy “has prompted asset markets to falter”, Tan Boon Heng of Mizuho Bank said in a report.

In early trading, the FTSE 100 in London rose 0.7 per cent to 7,624.31 and Frankfurt’s DAX added 0.6 per cent to 15,281.34. The CAC 40 in Paris was 0.7 per cent higher at 7,057.77.

On Wall Street, futures for the S&P 500 and the Dow Jones Industrial Average were up 0.2 per cent.

A man walks past a bank’s electronic board showing the Hong Kong share index. PHOTO: AP

The S&P 500 sank 0.4 per cent on Monday. The benchmark is 6.5 per cent below its January 3 high.

The Dow was little-changed while the Nasdaq composite fell 0.6 per cent.

In Asia, Shanghai Composite Index rose 0.7 per cent to 3,452.63 and the Hang Seng in Hong Kong sank one per cent to 24,329.49.

The Nikkei 225 in Tokyo gained 0.1 per cent to 27,284.52 after the government reported labor cash earnings declined 0.2 per cent from a year earlier in December. Core household spending fell one per cent from the previous month.

The Kospi in Seoul gained less than 0.1 per cent to 2,746.47 and Sydney’s S&P-ASX 200 gained advanced 1.1 per cent to 7,186.70.

India’s Sensex shed 0.2 per cent to 57,518.66. New Zealand, Singapore and Bangkok rose while Jakarta declined.

Traders are trying to figure out how stocks will be affected as the Fed carries out plans to accelerate the withdrawal of stimulus. Investors expect at least four rate hikes this year, starting next month.

The ECB is expected to take longer to wind down bond purchases that are meant to depress market interest rates by pumping money into the financial system.

Investors are waiting for United States (US) consumer inflation data, which might influence Fed planning. Also this week, central banks in India, Thailand and Indonesia hold policy meetings.

In energy markets, benchmark US crude lost 51 cents to USD90.81 per barrel in electronic trading on the New York Mercantile Exchange. The contract 99 cents to USD91.32 on Monday. Brent crude, the price basis for international oils, shed 61 cents to USD92.08 per barrel in London.

It declined 58 cents the previous session to USD92.69.

The dollar gained to JPY115.34 from Monday’s JPY115.08 yen.

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