ALBAWABA – Stocks worldwide mostly slid on Monday as markets braced for the upcoming United States (US) Federal Reserve (Fed) and United Kingdom’s (UK) Bank of England meetings this week.
While the Fed is expected to pin US interest rates on Wednesday – letting the dollar slip – the Bank of England will likely hike UK interest rates again on Thursday, according to Agence France-Presse (AFP).
Likewise, investors will be keeping a close watch on the Bank of Japan, also convening this week.
Meanwhile, oil prices are rallying towards $100 per barrel, further bolstering inflation, which fuels concerns that central banks around the world would be forced to hike interest rates.
"It's a big week ahead for central bank interest rate decisions, which can understandably make investors a bit jittery," noted Russ Mould, investment director at AJ Bell, as reported by AFP.
Stocks worldwide slip as tech shares weigh on markets
The pan European STOXX index slipped 0.5 percent, weighed down by health care, bank and chip stocks, according to Reuters.
Shares of Societe Generale, France's third-biggest listed bank, dropped more than 6 percent, almost marking the biggest single-day decline since March. In a statement, the bank said it expected little if any growth in annual sales over the coming years, pending a strategic plan from its new CEO, Reuters reported.
Economic news and data impact stocks worldwide - Shutterstock
Property developer China Evergrande Group’s shares plunged 25 percent on Monday after police detained a number of employees at its wealth management unit. Meanwhile, China’s Country Garden is going face to face with yet another liquidity test, with a deadline to pay $15 million in interest linked to an offshore bond in the coming days.
Tech shares in Asia dropped as well, with Taiwan's TSMC, the world's top contract chipmaker, falling 3 percent, according to Reuters.
Across the Pacific, US futures S&P 500 and Nasdaq edged up 0.1 percent .
"Bad news stories on the growth side will add to the risk-averse feeling that has been a backdrop in markets," James Rossiter, head of global macro strategy at TD Securities in London, told Reuters.
TD Securities' models predicted a slowdown in growth later this year that central banks might have to eventually counter by easing rates, said Rossiter.
"It's only natural that markets would begin to test that," he said.
MSCI's broadest stock index declined 0.15 percent by 0830 GMT after European indices opened lower. Whereas Japan's Nikkei was closed for a public holiday.
Stocks worldwide slip on fear of further rate hikes
A recent run of indicators suggests the US economy and labour market remain resilient even after more than a year of interest rate hikes. In other words, further rate hikes may have to remain on the table for longer.
Stocks worldwide decline on higher interest rates - Shutterstock
The Bank of England is set to hike again with UK annual inflation stubbornly high at 6.8 percent.
Elsewhere, oil prices extended gains as Russia and Saudi Arabia limit output, as the market braces for Saudi Energy Minister Prince Abdulaziz bin Salman’s policy conference later on Monday.
Observers say that, with output unlikely to pick up any time soon, prices could reach $100 soon.
Market summary by AFP and Bloomberg
S&P 500 futures rose 0.2 percent as of 1:04 p.m. Tokyo time.
The S&P 500 fell 1.2 percent on Friday
Nasdaq 100 futures rose 0.1 percent.
The Nasdaq 100 fell 1.8 percent
Australia’s S&P/ASX 200 fell 0.6 percent
Hong Kong’s Hang Seng fell 1.4 percent
London - FTSE 100: DOWN 0.3 percent at 7,685.20 points
Frankfurt - DAX: DOWN 0.5 percent at 15,807.34
Paris - CAC 40: DOWN 1.0 percent at 7,304.91
EURO STOXX 50: DOWN 0.8 percent at 4,261.49
Shanghai - Composite: UP 0.3 percent at 3,125.93 (close)
Tokyo - Nikkei 225: Closed for a holiday
New York - Dow: DOWN 0.8 percent at 34,618.24 points (close)
