Global stocks tumble as US inflation fuels rate hike fears

Beijing: Global stocks and Wall Street futures sank on Thursday after higher US inflation stoked expectations of more rate hikes that investors worry will chill economic growth. London and Frankfurt opened lower.

In Asia, markets in Shanghai, Hong Kong and Seoul ended lower, while Tokyo settled in the green. Equity markets in Europe were trading lower during mid-session deals. The US markets had ended lower on Wednesday. Meanwhile, international oil benchmark Brent crude declined 1.97 per cent to $97.61 per barrel.

The Shanghai Composite Index declined less than 0.1 per cent to 3,281.74 and the Hang Seng in Hong Kong shed 0.2 per cent to 20,751.21. Tokyo's Nikkei 225 gained 0.6 per cent to 26,643.39. Panasonic Holdings rose 1.1 per cent after the battery maker announced plans for a multi-billion dollar factory to supply Tesla and other automakers in Kansas. Sydney's S&P-ASX 200 added 0.4 per cent to 6,650.60 after official data showed employment rose more than expected in June.

The Kospi in Seoul advanced 0.3 per cent to 2,322.32. India's Sensex gained 0.4 per cent to 53,309.59. New Zealand and Jakarta advanced while Singapore and Bangkok declined. The Federal Reserve and central banks in Britain, South Korea and some other countries have hiked rates to cool surging prices. The European Central Bank has similar plans.

Traders expect another Fed rate hike this month, probably matching last month's 0.75 percentage point rise, the biggest in 28 years and three times the usual margin. Fed officials say a recession is possible but not certain. They point to a strong US job market despite higher borrowing costs. Traders are looking ahead to the latest quarterly results from big US companies in the next few weeks.

Wall Street's benchmark S&P 500 index declined after data on Wednesday showed US consumer inflation accelerated to 9.1 per cent in June over a year earlier from May's 8.6 per cent. That was despite three rate hikes this year by the Federal Reserve. Investors worry aggressive action by the Fed and other central banks to cool inflation that is at four-decade highs might derail global growth.

"Growth fears are hitting the markets harder than inflation concerns," Stephen Innes of SPI Asset Management said in a report. In early trading, the FTSE 100 in London lost 0.4 per cent to 7,126.97 and the DAX in Frankfurt gave up 0.2 per cent to 12,737.64. The CAC 40 in Paris declined declined 1.1 per cent to 5,933.53. On Wall Street, futures for the S and P 500 and Dow Jones Industrial Average were off 0.7 per cent. On Wednesday, the S&P 500 lost 0.4 per cent. The Dow fell 0.7 per cent and the Nasdaq composite dropped 0.2 per cent.

In energy markets, benchmark US crude lost $1.26 to $95.04 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 46 cents to $96.30 on Wednesday. Brent crude, the price basis for international oil trading, retreated $1.06 to $98.51 per barrel in London. It added 8 cents the previous session to $99.57 a barrel. The dollar rose to 139.23 yen from Wednesday's 137.32 yen. The euro declined to $1.0024 from $1.0062.