Global stocks fall on inflation, central bank moves

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, US, March 10, 2022. REUTERS/Brendan McDermid

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NEW YORK (Reuters) – Global stock markets tumbled on Thursday as U.S. inflation hit nearly 8%, making the Federal Reserve almost certain to raise interest rates next week, and the European Central Bank rushing to end its mega deals. stimulus programme.

Data showed that US consumer inflation reached 7.9% at an annual rate in February, the largest annual increase in 40 years. Wall Street pulled back on the data, giving up some of the gains made in the previous session’s recovery. Read more

The European Central Bank said it will stop pumping money into financial markets this summer, paving the way for higher interest rates as high inflation outweighs concerns about the fallout from Russia’s invasion of Ukraine. Read more

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Talks between Ukraine and Russia on Thursday failed to bring any truce to a conflict that has trapped hundreds of thousands of civilians in Ukrainian cities where they are sheltering amid air strikes and Russian bombing. Read more

The euro pared its overnight gains after the European Central Bank’s announcement, and the dollar strengthened as a result of the US inflation report. Read more

Some inflation could be good for stock prices, said Marisa Brown, managing director of applied research at Qontigo, but central banks have the work cut out for them to manage multi-decade inflation.

“We’ve reached that tipping point between good inflation and bad inflation. It’s driving volatility higher, and higher volatility usually drives investors away,” Brown said.

“So the sentiment is very uncertain. Now that we’re where we are, can (central bankers) walk that fine line between managing inflation and not pushing us into a recession?”

MSCI’s benchmark for stocks worldwide (.MIWD00000PUS) It was down 0.34% at 3:13 PM ET (2013 GMT).

Dow Jones Industrial Average (.DJI) The index fell 182.71 points, or 0.55 percent, to 33,103.54 points, the Standard & Poor’s 500 (.SPX) It lost 26.26 points, or 0.61%, to 4,251.62 points, and the Nasdaq Composite (nineteenth) It fell 143.49 points, or 1.08%, to 13112.06 points.

Pan-European STOXX 600 Index (.stoxx) He lost 1.69%.

The dollar index rose 0.534 percent, with the euro falling 0.81 percent to $1.0985, after its strongest day in the previous session in nearly six years.

With sharp increases in energy and other commodity markets due to the war in Ukraine, it will likely take longer to reach peak inflation, said Vineta Dimitrova, chief US economist at Ned Davis Research.

“This means higher inflation for a longer period and a left policy path for the Fed going forward,” Dimitrova said, adding that she expects the Fed to go ahead with a 25 basis point rate hike next week.

“With all the geopolitical uncertainty and market volatility out there, the Fed doesn’t want to add to the uncertainty.”

Oil fell in volatile trade after the United Arab Emirates retracted comments that OPEC and its allies may increase production to help plug the gap in exports from Russia.

US crude oil futures settled at $1.06.02 a barrel, down 2.47%, while international benchmark Brent crude settled at $109.33, down 1.63%.

A draft declaration on Thursday showed that European Union leaders will gradually stop buying Russian oil, gas and coal, as the union seeks to reduce its dependence on Russian energy sources, following a ban from the United States. Read more

Other riskier assets such as cryptocurrencies also declined, with bitcoin dropping 6.5%.

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(Reporting by Elizabeth Dilts Marshall in New York with additional reporting by Tom Wilson.) Editing by Raisa Kasulowski, Alex Richardson and Chizu Nomiyama

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