Statements by central bankers rejecting rate cuts caused volatility, correcting the previous excessive optimism that flooded global stock markets.
In commodities, oil prices lost around 2%, while gold fell 0.4%, trading at $2,020 per ounce.
Depositphotos
This Wednesday, global markets are experiencing sharp declines, as central banks reject expectations of rate cuts and signs emerge of an uneven economic recovery in China. These are the highlights in the global economy.
The global dollar is trading at one-month highs after Federal Reserve Governor Christopher Waller warned that the entity should not rush to reduce ratesdespite the fact that inflation is close to the 2% target.
The European Central Bank, represented by Klaas Knot, noted that investors’ excessive bets on rate cuts could backfire, stopping monetary relief. Likewise, an unexpected rise in inflation in the United Kingdom generated a rise in the yields of British public debt, reducing expectations of an early rate reduction by the Bank of England.
Although the Chinese economy grew by 5.2% in 2023, exceeding the official target, the recovery was weaker than anticipated, with a real estate crisis on the rise, deflationary risks and tepid demand. As a result, Asian stock markets fell almost 2%, reaching their lowest level in a month, while the Hong Kong stock index lost more than 3%.
For their part, European stocks are losing more than 1%, and US stock futures indicate a downward opening on Wall Street, which, by the way, did not start the year on the right foot, except for some sectors of the NYSE.
The reasons behind the faltering stock markets
Statements by central bankers rejecting rate cuts caused volatility, correcting the previous excessive optimism.
The odds of a Fed rate cut in March fell to 65%, compared to 81% at the start of the week. Expectations for ECB cuts in 2024 fell to 140 basis points, with them seen as more likely to start in April than March.
- Geopolitical concerns in the Red Sea, Gaza and Ukraine contributed to market uncertainty.
- In currencies, the dollar index was trading at a one-month high, with the Chinese yuan hitting its lowest level in almost two months against the dollar.
- In commodities, oil prices lost around 2%, while gold fell 0.4%, trading at $2,020 per ounce.
Source: Ambito
I am a 24-year-old writer and journalist who has been working in the news industry for the past two years. I write primarily about market news, so if you’re looking for insights into what’s going on in the stock market or economic indicators, you’ve come to the right place. I also dabble in writing articles on lifestyle trends and pop culture news.
