BEIJING (AP) – Global stock markets were mixed yesterday as investors braced for another sharp interest rate hike by the Federal Reserve to cool inflation.
London and Shanghai advanced while Tokyo and Frankfurt declined. Oil rose nearly USD2 per barrel.
Wall Street futures were lower after the benchmark S&P 500 index gained 0.1 per cent on Monday.
This week’s Fed meeting is expected to announce a rate hike of up to three-quarters of a percentage point, triple the usual margin. That would put the Fed’s benchmark rate in a range of 2.25 per cent to 2.5 per cent, the highest since 2018 before the coronavirus pandemic.
Optimists hope for a “Fed dial back”, but mixed reactions suggest sentiments are conflicted, said Tan Boon Heng of Mizuho Bank in a report.
In early trading, the FTSE 100 in London advanced 0.7 per cent to 7,348.61 while the DAX in Frankfurt lost 0.5 per cent to 13,144.82. The CAC 40 in Paris shed 0.1 per cent to 6,232.77.
On Wall Street, the S&P 500 future was off 0.3 per cent and that for the Dow Jones Industrial Average lost 0.4 per cent.
In Asia, the Shanghai Composite Index rose 0.8 per cent to 3,277.44 while the Nikkei 225 in Tokyo shed 0.2 per cent to 27,655.21.
The Hang Seng in Hong Kong gained 1.7 per cent to 20,905.88 after Alibaba Group, the world’s biggest e-commerce company, announced plans to change the status of its Hong Kong-traded shares to make them more accessible to mainland Chinese buyers.
Alibaba went public in New York in September 2014 and completed a secondary listing in Hong Kong in November 2019. The proposed change would upgrade Alibaba’s Hong Kong status to a primary listing along with New York, making the shares eligible for purchase through mainland brokerages.
The Kospi in Seoul added 0.4 per cent to 2,412.96 after data showed the South Korean economy grew by a stronger-than-expected 0.7 per cent over the previous quarter in the three months ending in June.
Sydney’s S&P-ASX 200 was 0.3 per cent higher at 6,807.30.
India’s Sensex lost 0.7 per cent at 55,384.00. New Zealand and Bangkok retreated while Singapore and Jakarta gained.
Investors worry aggressive rate hikes by the Fed to contain inflation that is at four-decade highs and similar action by central banks in Europe and Asia might derail global economic growth.
United States (US) inflation has accelerated to 9.1 per cent, its highest since 1981.
The US economy is slowing, but healthy hiring shows it isn’t in recession, Treasury Secretary Janet Yellen said on Sunday. Fed officials who publicly support a rate hike also cite a strong job market as evidence the economy can stand higher borrowing costs.
On Wall Street, the Dow gained 0.3 per cent while the Nasdaq Composite fell 0.4 per cent.
On Monday, Walmart shares fell nearly 10 per cent in after-hours trading after the retail giant lowered its profit outlook for the second quarter and full year. The company said shoppers are cutting back on discretionary items, particularly clothing, that carry higher profit margins.
Tomorrow, the Commerce Department is due to release US economic growth estimate for the thee months ending in June. Some forecasters expect a second quarter of contraction after output shrank 1.6 per cent in the three months ending in March.