BEIJING (AP) — Global stock markets sank Monday after Wall Street ended with a loss for the week amid anxiety about Federal Reserve plans for more interest rate hikes to cool inflation.
London, Frankfurt, Shanghai and Hong Kong fell. Tokyo gained. Oil prices declined.
U.S. stock indexes ended with a weekly loss after a Fed official, James Bullard, rattled investors by suggesting the central bank's base lending rate might have to be raised to as much as almost double its already elevated level.
“Bullard dimmed the light on rallies,” said Tan Boon Heng of Mizuho Bank in a report.
In early trading, the FTSE 100 in London lost 0.5% to 7,352.63. The DAX in Frankfurt sank 0.3% to 14,385.04 and the CAC 40 in Paris retreated 0.2% to 6,631.30.
On Wall Street, the future for the benchmark S&P 500 was down 0.4%. That for the Dow Jones Industrial Average was off 0.3%.
On Friday, the S&P 500 index rose 0.5%. The Dow added 0.6% and the Nasdaq composite lost less than 0.1%.
Bullard, president of the St. Louis Federal Reserve Bank, suggested the Fed’s benchmark rate might have to rise to between 5% and 7%. That would be up from its current level of 3.75% to 4% after four hikes of 0.75 percentage points, three times the Fed’s usual margin.
Investors worry repeated rate hikes by the Fed and central banks in Asia and Europe this year to cool surging inflation might tip the global economy into recession.
Traders hope signs economic activity is slowing and inflation pressures are easing might prompt the Fed to ease off its plans. Fed officials including chair Jerome Powell have warned rates might need to stay high for an extended period to extinguish inflation.
Traders expect the Fed to raise its key rate again at its December meeting but by a smaller margin of 0.5 percentage points.
In Asia, Hang Seng in Hong Kong lost 1.9% to 17,655.91. It was down more than 3% earlier after the territory's leader, John Lee, tested positive for the coronavirus after returning from an Asia-Pacific meeting in Bangkok.
The Shanghai Composite Index lost 0.4% to 3,085.04 and the Nikkei 225 in Tokyo lost 0.2% to 27,944.79.
The Kospi in South Korea fell 1% to 2,419.50 and Sydney's S&P-ASX 200 lost 0.2% to 7,139.30.
India's Sensex sank 0.9% to 61,132.92. New Zealand and Bangkok gained while Singapore and Jakarta declined.
On Friday, U.S. retailers gained after they reported strong quarterly results and gave investors encouraging financial forecasts. Discount retailer Ross Stores surged 9.9% for the biggest gain among S&P 500 stocks. Shoe seller Foot Locker climbed 8.7% after raising its profit and revenue forecast for the year.
U.S. retail sales rose 1.3% in October in a sign of consumer confidence ahead of Christmas shopping. Still, with inflation high, major retailers say Americans are holding out for sales and refusing to pay full price.
In energy markets, benchmark U.S. crude lost 69 cents to $79.42 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.56 to $80.08 on Friday. Brent crude, the price basis for international oil trading, sank 77 cents to $86.85 per barrel in London. It slumped $2.16 to $87.62 the previous session.
The dollar rose to 141.11 yen from Friday's 140.36 yen. The euro fell to $1.0257 from $1.0331.