The broadest index of world stocks in MSCI it fell 0.4% to one-week lows at 645.73. * MSCI’s broader index of Asia-Pacific shares outside Japan fell 1.36% to 529.49, its lowest level since Jan. 9. The index is down 3% for the month and is heading for its third consecutive week of losses.
In Europe, the pan-European index STOXX 600 fell 0.64%, set for its first daily drop this week. The German DAX was down 0.82%. French blue chip stocks and the UK FTSE fell from all-time highs, 0.67% and 0.23% respectively.
Stock returns on the other side of the Atlantic were also set to follow the lead of S&P 500 futures and were down 0.63%.
It’s hard to gauge how markets will interpret the Fed’s next moves on inflation, said Florian Ielpo, macroeconomic director at Lombard Odier Asset Management.
Traders have increased their bets on how much they think the Fed will raise, and are now pricing in a high of around 5.3% in July. Bets on a year-end rate cut have eased, with traders pricing a 75% chance of a 25bp rate cut in December.
Two Fed officials said Thursday that the US central bank probably should have raised interest rates more than it did earlier this month, warning that further increases in borrowing costs were essential to reduce inflation to desired levels.
In its monetary policy meeting on January 31 and February 1, the Fed chose to moderate the pace of interest rate hikes, raising rates by 25 basis points to the range of 4.50% to 4.75%. % after a series of steeper interest rate hikes last year.
But since then, economic data points to a tight labor market and resilient inflation keeping pressure on the central bank to stay on its tightening path. * Bets on higher rate caps have pushed two-year US Treasury yields, sensitive to interest rate expectations, to a three-month high of 4.69%.
The yield on the 10-year Treasury rose about 5 basis points to 3.90% on Friday. Boosted by bets on higher rates, the dollar index, which measures the US currency against six major rivals, rose as much as 0.4% on Friday to 104.24, a new six-week high.
The euro and sterling fell to their lowest level in more than a month. The euro was down 0.3% at $1.0639, while sterling last traded at $1.1941, down 0.4% on the day.
The Japanese yen rose 0.7% to 134.89 per dollar.
Elsewhere, US crude fell 2.45% to $76.57 a barrel and Brent was at $83.16, down 2.33% on the day.
By Nell Mackenzie and Ankur Banerjee, Reuters Agency
Source: Ambito
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