World Shares Mixed After Latest Wall St Retreat
BANGKOK (AP) -- Shares gained Monday in Europe after retreating in Asia, where they tracked Wall Street's latest decline.
Last week, U.S. shares suffered their worst setback since early December. Reports on inflation, the jobs market and retail spending have come in hotter than expected, leading analysts to raise forecasts for how high the Federal Reserve will have to take interest rates to slow the U.S. economy and cool inflation.
Higher rates pressure business activity and investment prices. So far, they do not seem to be slowing growth as much as anticipated. The S&P 500 fell 1.1% Friday to cap its third straight loss. The Dow Jones Industrial Average dropped 1% and the Nasdaq composite lost 1.7%.
"It is becoming increasingly apparent that inflation, and associated inflation expectations and wage pressures, will not decline in a predictable linear manner," Mizuho Bank said in a commentary. Geopolitical tensions also were weighing on sentiment, it said, after the U.S. and other western countries imposed new sanctions on Russia for its war on Ukraine.
In Monday trading, Germany's DAX rose 1.2% to 15,401.15 while the CAC 40 in Paris added 1.3% to 7,281.00. Britain's FTSE 100 gained 0.9% to 7,945.59. The future for the Dow Jones Industrial Average climbed 0.3% and that for the S&P 500 gained 0.4%.
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In Asia, Tokyo's Nikkei 225 index edged 0.1% lower to 27,423.96 and the Kospi in Seoul gave up 0.9% to 2,402.64.
In Hong Kong, the Hang Seng lost 0.3% to 19,943.51 while the Shanghai Composite index was down 0.3% at 3,258.03. Australia's S&P/ASX 200 shed 1.1% to 7,224.80.
Bangkok was 0.2% lower while the Sensex in Mumbai dropped 0.6%.
The measure of inflation preferred by the Fed, reported Friday, said prices were 4.7% higher in January than a year earlier, after ignoring costs for food and energy because they can swing more quickly than others. That was an acceleration from December's inflation rate and was higher than economists' expectations for 4.3%.
It echoed other reports earlier in the month that showed inflation at both the consumer and wholesale levels was higher than expected in January.
Other data Friday showed that consumer spending, the biggest piece of the economy, returned to growth in January, rising 1.8% from December. A separate reading on sentiment among consumers came in slightly stronger than earlier thought, while sales of new homes improved a bit more than expected.
Such strength paired with the remarkably resilient job market raises the likelihood the economy might avoid a recession in the near term. But they also make it more likely that the Fed will keep interest rates higher for longer.
Tech and high-growth stocks have taken the brunt of selling pressure. Investments seen as the most expensive, riskiest or making their investors wait the longest for big growth are among the most vulnerable to higher rates.
Traders are increasing bets on the Fed raising its benchmark rate to at least 5.25% and keeping it that high through the end of the year. It's currently in a range of 4.50% to 4.75%, and it was at virtually zero a year ago.
Expectations for a firmer Fed have caused yields in the Treasury market to shoot higher this month, and they climbed further Friday.
The yield on the 10-year Treasury rose to 3.96%, up from 3.89% late Thursday. It helps set rates for mortgages and other important loans. The two-year yield, which moves more on expectations for the Fed, rose to 4.79% from 4.71% and is near its highest level since 2007.
In other trading Monday, U.S. benchmark crude oil rose 38 cents to $76.70 per barrel in electronic trading on the New York Mercantile Exchange. It gained 93 cents to $76.32 per barrel on Friday. Brent crude oil, the pricing basis for international trading, shed 34 cents to $83.16 per barrel.
The dollar fell to 136.35 Japanese yen from 136.45 yen. The euro rose to $1.0558 from $1.0549.