World Shares Track Wall Street's Slump After Fed Says Rates May Stay High in '24

(AP) -- World shares have declined, echoing a slump on Wall Street after the Federal Reserve said it may not cut interest rates next year by as much as it earlier thought.

Benchmarks fell by 1% or more in Paris, Tokyo, Sydney and Hong Kong. U.S. futures slipped and oil prices also were lower.

On Wednesday, the Fed held its main interest rate steady at its highest level in more than two decades, as was expected. Officials also indicated they may raise the federal funds rate once more this year, as they try to get inflation down to a 2% target.

High rates hurt prices for all kinds of investments, and the news cast a pall on trading Thursday.

"Moving forward, traders will scrutinize every piece of data from the US, with a particular emphasis on inflationary indicators, to gauge the potential for prolonged high rates," Anderson Alves of ActivTrades said in a commentary.

Germany's DAX declined 0.7% to 15,673.52 and the CAC 40 in Paris retreated 1% to 7,262.44. Britain's FTSE 100 gave up 0.4% to 7,698.07.

On Wall Street, the future for the S&P 500 was down 0.3% while that for the Dow Jones Industrial Average fell 0.2%. On Wednesday, the S&P 500 fell 0.9% and the Dow industrials lost 0.2%. The Nasdaq composite dropped 1.5%.

The Fed's chair, Jerome Powell, said the Fed is close to hitting the peak on rates, if not there already.

Powell, though, stressed that forecasts about where rates and other indicators are heading could change as more data come in.

"Forecasters are a humble lot, with much to be humble about," Powell said.

In Asian trading, Hong Kong's Hang Seng lost 1.3% to 17,665.41 and the Shanghai Composite index gave up 0.8%, to 3,084.70.

Tokyo's Nikkei 225 was off 1.4% at 32,571.03, while in Seoul the Kospi shed 1.6% to 2,514.97. Australia's S&P/ASX 200 slipped 1.4% to 7,065.20.

Shares of electronics and energy giant Toshiba Corp. gained 0.2% Thursday after it announced that a 2 trillion yen ($14 billion) tender offer for the troubled electronics and energy giant by a Japanese consortium has been completed, clearing the way for it to be delisted.

New Zealand's benchmark stock index fell less than 0.1% as figures released Thursday by Statistics New Zealand indicated the economy expanded at a 3.2% annual pace in the April-June quarter. In quarterly terms, GDP rose by 0.9% . Finance Minister Grant Robertson said the economy was turning a corner and growing at twice the rate predicted by economists.

The figures come three weeks before a general election and on the same day that dairy exporter Fonterra reported a 170% increase in its annual after-tax profit to 1.6 billion New Zealand dollars ($948 million). Fonterra warned, however, of falling milk prices due to reduced demand for milk powder from countries like China. Its shares jumped 3.1%.

Fed officials suggested they may cut rates in 2024 by only half a percentage point from where they're expected to end this year. That's less than the full percentage point of cuts they were penciling in as of June.

In other trading Thursday, U.S. benchmark crude oil lost 92 cents to $88.73 a barrel in electronic trading on the New York Mercantile Exchange. It gained 82 cents on Wednesday.

Brent crude, the pricing basis for international trading, declined 95 cents to $92.58 a barrel.

The U.S. dollar slipped to 148.19 Japanese yen from 148.35 yen. Traders are watching to see what the Bank of Japan does when it wraps up a monetary policy meeting on Friday. No major changes are expected, but analysts say they believe the central bank is moving toward a change in its longstanding negative interest rate policy.

The euro weakened to $1.0642 from $1.0661.