Global stocks fall after a tough day on Wall Street

Some markets in Asia fell sharply, with Japan’s benchmark index Nikkei (N225) and Australia’s S & P / ASX 200 are down 2.9% and 2.7% respectively. South Korea Kospi (KOSPI) fell 1.1 percent. Stock in China was flat.
European stocks fell in early trading. France CAC 40 (CAC40) fell 1[ads1].4%, while Germany’s DAX 30 fell 1.1%. The FTSE 100 fell 0.9 percent in London.

A strong US economy and higher inflation could cause the Federal Reserve to raise interest rates faster than investors had expected, minutes from the central bank’s December meeting showed. Some politicians also want to step on the brakes by shrinking the Fed’s balance sheet just after interest rates start to move higher.

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“Overall, faster downsizing, earlier rate hikes and earlier balance sheet reductions are on the cards if the economy and asset markets allow it,” Societe Generale strategist Kit Juckes wrote in a research note. The bigger long-term question is whether there is enough stickiness to the inflation rate to force [Fed] to tolerate a deeper stock market correction than they may have done in recent years before changing pace. “

The Dow (UNUELT), which had just reached record highs, closed down 1.1%, or 393 points, on Wednesday after the Fed protocol was released. The S&P 500 (SPX), the broadest index following US equities, ended 1.9% lower, marking the worst day since the end of November.
Tech stocks were hit especially hard during Wednesday’s session, with it Nasdaq Composite (COMP) falls by 3.3%, the worst result since February 2021. When government bond yields rise, more risky investments become less attractive. The valuation of technology companies is also linked to future earnings, which look darker when inflation and higher interest rates are taken into account.
Some global technology companies also came under pressure on Thursday. In Hong Kong, gaming company Bilibili (BILI) and the short video platform Kuaishou lost approx. 6% and 4%. Of Germany SAP (SAP) lost 2.7% in early trading.
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Omicron also threatens global markets. The coronavirus variant has led to a rapid increase in infections and new restrictions worldwide, including a major shutdown in China and a curfew in the Indian capital New Delhi. India’s standard S&P BSE Sensex (SENSEX) The index fell 1% on Thursday.
Investors have been worried for several weeks about what the highly contagious burden will mean for global companies and markets, while preparing for the prospect of interest rate increases in the coming months.

– Anneken Tappe contributed to this report.

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