New York – (AFP) – Wall Street pointed lower before the opening bell on Monday ahead of another expected interest rate hike from the US Federal Reserve.
Dow Jones Industrial Average futures and S&P 500 futures were down 0.9% each.
Britain was celebrating a day of mourning Queen Elizabeth II. Japanese markets were closed for a holiday.
The German DAX lost 0.4% while the CAC 40 in Paris was down 1%.
Markets have been on alert due to stubbornly high inflation and the interest rate increases used to fight it. The fear is that the Federal Reserve and other central banks may exceed their policy goals, leading to a recession.
Most economists expect that The Fed will raise the key lending rate Another three-quarters of a point when central bank leaders meet this week.
“The reality is that optimistic forecasts based on ‘hot under the hood’ US inflation data means that markets have good reason to prepare for headwinds amid the prospects of higher interest rates (for a longer period); arguably, Mizuho Bank’s Vishnu Varathan said in a commentary. Higher against the longer dollar (dollar) too”.
Hong Kong’s Hang Seng lost 1% to 18,565.97 while the Shanghai Composite fell 0.4% to 3115.60. Australia’s S&P/ASX 200 slipped 0.3% to 6,719.90. In Seoul, Kospi sank 1.1% to 2,355.66.
The Bank of Japan will meet on Wednesday and Thursday amid mounting pressure to counter the sharp drop in the value of the yen against the dollar. This has raised costs for businesses and consumers, who have to pay more for imports of oil, gas and other necessities.
However, the Bank of Japan has so far held steady in maintaining a very low reference rate at 0.1% in hopes of stimulating investment and spending.
On Friday, FedEx’s stark warning on Friday about rapidly deteriorating economic trends heightened concern in the markets. The S&P 500 fell 0.7%, while the Nasdaq lost nearly 1%. Dow lost nearly half a percent.
The S&P 500 fell 4.8% over the course of the week, with much of the loss coming from Tuesday’s 4.3% decline after a surprisingly hot report on inflation.
All major indices have now posted losses in four of the past five weeks.
FedEx It fell 21.4% in its largest single-day sell-off on Friday after investors warned that its fiscal first-quarter earnings were likely to fall short of expectations due to a downturn in business. The parcel delivery service is also closing storefronts and corporate offices and expects to further weaken business conditions.
Higher interest rates tend to weigh on stocks, especially the more expensive technology sector. The housing sector is also hurting as interest rates rise. The long-term US average Mortgage rates It jumped above 6% last week for the first time since the 2008 housing crash. The higher rates may make an already tight housing market more expensive for American homebuyers.
But raising interest rates has not calmed the economy much yet.
Last week, the United States reported that Consumer prices increased by 8.3% in August compared to last yearThe The job market is still hectic And the Consumers keep spendingAll this gives ammunition to Federal Reserve officials who say the economy can withstand further price increases.
In other trading on Monday, benchmark US crude lost $2.01 to $83.10 a barrel in electronic trading on the New York Mercantile Exchange. Its stock rose one cent to $85.11 a barrel on Friday.
Brent crude gave up $1.93 to $89.42 a barrel.
The dollar rose to 143.57 yen from 142.94 yen. The euro fell to 99.93 cents from $1.0014.
Associated Press writer Elaine Kortenbach contributed to this report from Bangkok.
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