Global Shares Dip as Wall Street Sinks on Rate Concerns

Global stock markets experienced a downturn on Wednesday, following a significant sell-off on Wall Street that ended its exceptional bullish trend with the market’s worst performance in recent weeks.

In Europe, the French CAC 40 saw a minor increase of 0.1% to 8,139.15, and the German DAX rose by 0.3% to 18,331.04 in the early hours. However, the British FTSE 100 fell by 0.6% to 7,887.60. In the U.S., futures pointed to a lower opening, with Dow futures dropping 0.1% to 39,475.00 and S&P 500 futures decreasing by 0.2% to 5,251.50.

In Asia, Japan’s Nikkei 225 fell by 0.8% to 39,511.88, while Australia’s S&P/ASX 200 declined by 1.3% to 7,782.50. The South Korean Kospi fell by 1.4% to 2,714.18, Hong Kong’s Hang Seng lost 1.1% to 16,753.82, and the Shanghai Composite slightly dropped by 0.2% to 3,070.04.

Concerns are mounting that the unease affecting Wall Street could extend to Asia, despite China showing some positive economic indicators recently.

Stephen Innes, a managing partner at SPI Asset Management, mentioned that investors are bracing for the possibility that the current market volatility might signify a more profound adjustment.

China has announced an ambitious economic growth goal of about 5% for the year, aiming to overcome challenges in its real estate sector and the residual impact of pandemic disruptions.

A report from Moody’s Ratings highlighted that China’s economic slowdown is likely to exacerbate challenging conditions for Japanese companies specializing in manufacturing, automotive parts, and elevator systems over the next 12 to 18 months due to reduced Chinese demand.

Market expectations for the Federal Reserve’s interest rate cuts have significantly lowered, with predictions halving from an initial six cuts forecasted at the beginning of the year to align with the Fed officials’ indications of potentially three cuts.

Given the U.S. economy’s resilience, there’s increasing speculation among investors that the Fed might only implement two rate cuts this year.

In the commodities market, U.S. crude oil saw a slight increase of 4 cents to $85.19 a barrel, and Brent crude edged up by 7 cents to $89.01 a barrel.

Currency trading saw the U.S. dollar gaining strength against the Japanese yen, moving up to 151.71 from 151.54 yen. The euro saw a marginal increase to $1.0775 from $1.0776.