Global equities mixed after Wall Street fell on interest rate fears

BEIJING (AP) – Global stock markets were mixed on Tuesday as traders waited for a speech from Federal Reserve Chair Jerome Powell for clues on rate plans after Japanese wages rose and Australia’s central bank hiked interest rates again had raised.

London and Shanghai won. Futures on Frankfurt, Tokyo and Wall Street fell. Oil prices rose.

Last week’s stronger-than-expected US hiring and wages data dampened hopes that the Fed might decide it has managed to cool inflation, which is at a multi-decade high, and quash plans for further rate hikes.

In Washington, Powell “will likely reiterate that inflation is still too high” and “Federal interest rates need to rise,” High-Frequency Economics’ Rubeela Farooqi and John Silvia said in a report.

Traders fear the Fed and other central banks could push the global economy into recession in a bid to wipe out inflation. Some are expecting a US rate cut as early as late 2023, despite comments from Fed officials that borrowing costs need to remain high for an extended period.

In early trade, the FTSE 100 in London was up 0.3% to 7,863.65. Frankfurt’s DAX fell 0.4% to 15,291.90 and the CAC 40 in Paris lost 0.3% to 7,115.76.

On Wall Street, futures for the benchmark S&P 500 index and the Dow Jones Industrial Average lost 0.1%.

On Tuesday, the S&P 500 fell 0.6% and the Dow fell 0.1%. The Nasdaq Composite plunged 1%.

In Asia, the Nikkei 225 in Tokyo fell less than 0.1% to 27,685.47 after the government reported wages rose 4.8% in December from a year earlier. That was near a three-decade high as workers push for higher wages to keep up with inflation.

The Shanghai Composite Index rose 0.3% to 3,248.09 and Hong Kong’s Hang Seng rose 0.6% to 21,298.70. Seoul’s kospi rose 0.6% to 2,451.71.

Sydney’s S&P ASX 200 lost 0.5% to 7,504.10 after the Reserve Bank of Australia hiked interest rates by 0.25 percentage point to 3.35%. The RBA said more rate hikes are planned to bring inflation, which is at a 33-year high of 7.8%, to its target range of 2% to 3%.

India’s Sensex fell 0.4% to 60,284.40. New Zealand and Singapore declined while Jakarta and Bangkok advanced.

The two-year Treasury yield, which is trending in line with expectations for the Fed, rose an unusually wide extent to 4.47% from 4.29% on Friday and 4.1% the previous day.

The yield on the 10-year Treasury bond, which helps set interest rates on mortgages and other major loans, rose to 3.64% from 3.52% late Friday.

Traders fear the Fed and central banks in Europe and Asia may be poised to plunge the global economy into recession in a bid to wipe out inflation, which is at multi-decade highs.

Friday’s payroll data showed that the US economy added twice as many jobs as expected last month, despite higher interest rates. That’s good for workers, but the Fed fears wage increases will push up inflation. This fuels fears that the US Federal Reserve could push interest rates higher.

In energy markets, US crude, the benchmark, gained between $1.65 and $75.76 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 72 cents on Monday to $74.11. Brent crude, the price basis for international oil trading, rose $1.62 to $82.61 a barrel in London. It added $1.05 to $80.99 in the previous session.

The dollar fell to 131.81 yen from 132.67 yen on Monday. The euro fell from $1.0728 to $1.0716.

Joe McDonald, The Associated Press

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