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Global markets fall after a tough week on Wall Street; The yen reaches two decades-low

Hong Kong / London
CNN Business

Global markets and US stock futures fell early Monday, indicating a poor start to the trading week following broad Wall Street sales following surprisingly strong US inflation data.

The Dow index plunged 880 points, or 2.5%, on Friday. The S&P 500 (SPX) fell 2.7% and the Nasdaq (NDX) fell around 3%. The US consumer price index rose by 8.6% in May, raising fears that the Federal Reserve will have to act even more aggressively to try to curb price increases.

The shock waves were felt most acutely in Asia on Monday. The Japanese Nikkei (N225) closed down 3%, and the yen weakened to its lowest level in more than 20 years. The Japanese currency has fallen sharply in recent months due to a strong dollar and extremely loose Japanese monetary policy.

The Japanese central bank and the government warned in a rare joint statement on Friday that they were concerned about the sharp fall, suggesting a potential intervention by Tokyo to stop the decline.

Yenen was not the only Asian currency to see a sharp fall. The Indian rupee fell to a record low of 78.2 against the US dollar in early trade.

Elsewhere in Asia, Hong Kong’s Hang Seng (HSI) fell 3.4% on Monday. Korea’s Kospi fell 3.5 percent. China’s Shanghai Composite (SHCOMP) fell 0.9 percent.

In Europe, France’s CAC 40 (CAC40) fell 2.47% in early trading, while Germany’s DAX 30 (DAX) was down 2.3%. The FTSE 100 (UKX) fell 1.8%, while the pound fell to $ 1.22 after new data showed that the UK economy collapsed for the second month in a row in April.

In the US, Dow futures were down 1.9% at 5:20 am ET. S&P 500 futures were down around 2.3%, while Nasdaq futures were down around 2.9%.

“The rush from Friday’s US CPI data is not helped by concerns that China is reversing some of its economic reopening, or more serious economic data in the UK,” Societe Generale strategist Kit Juckes said in a research note.

A number of neighborhoods in Shanghai faced a new temporary shutdown over the weekend, as authorities began mass testing just days after Covid restrictions were eased for most of the 25 million residents.

Authorities in Beijing’s largest Chaoyang district on Thursday announced the closure of all entertainment venues, just days after allowing the reopening.

– CNN’s Nicole Goodkind contributed to this report

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