Global equities fall on fear of hawkish central bank hikes
Global shares traded around their lowest levels in more than a month on Wednesday and U.S. Treasury yields stuck to around their highest since November, as fresh fears about inflation and interest rates weighed on market sentiment.
MSCI’s broad index of global shares (.MIWD00000PUS) fell 0.4% to head for its lowest since Jan. 20, while the index’s broad gauge of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 1.3% to its lowest since Jan. 6.
Europe’s STOXX 600 share index (.STOXX) fell 0.4% in early trade. Wall Street futures markets indicated the S&P 500 share index would drift 0.2% higher after dropping 2% in the previous session.
A batch of surprisingly upbeat data in recent weeks has scotched a cross-asset rally that began last October, which was based on a scenario of the global economy cooling just enough to persuade hawkish central banks to pause rate hikes.
Wall Street posted its worst daily performance of the year on Tuesday, as investors responded to an unexpectedly strong reading from S&P Global’s composite PMI with concerns that robust business conditions would continue to fuel inflation.
“The market has been overly optimistic,” said Luca Paolini, chief strategist at Pictet Asset Management.
“The economic data has been much more resilient than we all thought (it would be) and we have to accept that.”
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