Stock market today: Global markets lower ahead of what traders hope will be a final Fed rate hike
By JOE McDONALD
AP Business Writer
BEIJING (AP) — Global stock markets were lower Wednesday after Wall Street hit a 15-month high ahead of what traders hope will be the Federal Reserve’s final increase in this interest rate cycle.
London and Paris opened lower. Shanghai, Tokyo and Hong Kong. Oil prices retreated.
Wall Street’s benchmark S&P 500 index rose 0.3% on Tuesday after companies reported bigger profits than expected.
On Wednesday, investors expect the Fed to raise its key lending rate by 0.25 percentage points to a 22-year high. They hope the U.S. central bank can manage a “soft landing,” extinguishing inflation while avoiding a recession.
“There remains a risk that (Fed chair) Jerome Powell could maintain a more hawkish slant than markets would like,” Tim Waterer of KCM Trade said in a report. “With the labor market remaining tight, the Fed chairman will likely want to keep all options open for further tightening.”
Meanwhile, traders waited to see how China’s ruling Communist Party will carry out its promise to shore up sluggish economic growth. The ruling party has pledged to support entrepreneurs and the struggling real estate industry but has given no details.
That leaves “room for disappointment if the stimulus details were to lack conviction,” Yeap Jun Rong of IG said in a report.
In early trading, the FTSE in London was off 0.1% at 7,684.72. The CAC 40 in Paris gave up 0.9% to 7,351.28 and the DAX in Frankfurt retreated 0.2% to 16,183.28.
On Wall Street, the S&P 500 future was up less than 0.1%. That for the Dow Jones Industrial Average was off less than 0.1%.
On Tuesday, the Dow gained 0.1% and the Nasdaq composite climbed 0.6%.
In Asia, the Shanghai Composite Index lost 0.3% to 3,223.02 and the Nikkei 225 in Tokyo shed less than 0.1% to 32,668.34. The Hang Seng in Hong Kong fell 0.3% to 19,381.15.
The Kospi in Seoul tumbled 1.7% to 2,592.36 while India’s Sensex advanced 0.7% to 66,825.31.
Sydney’s S&P-ASX 200 rose 0.9% to 7,402.00 after the government reported Australian inflation eased to 5.4% in June from the previous month’s 5.5%, reducing pressure on the central bank for another interest rate hike to cool upward pressure on prices.
Bangkok declined while New Zealand and other Southeast Asian markets advanced.
On Wall Street, General Electric led gains with a 6.3% rally on Tuesday after it reported better-than-expected quarterly profit and raised its forecasts for full-year revenue and profit.
Another industrial giant, 3M, rose 5.3% after the maker of Scotch-Brite and Post-It raised its forecast for annual profit. Home builder PulteGroup climbed 6.2% after reporting stronger profit for the spring than expected.
Alaska Air Group fell 9.7% despite reporting stronger profit and revenue. Analysts said investors may have been disappointed with its financial forecasts for the current quarter.
About 30% of the companies in the S&P 500 are due to report earnings this week.
The U.S. job market has been unexpectedly strong, which has allowed U.S. households to keep spending and propping up the economy. A report Tuesday showed U.S. consumer confidence rose by more than economists expected.
In energy markets, benchmark U.S. crude lost 16 cents to $79.47 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 89 cents the previous session to $79.63. Brent crude, the price basis for international oil trading, sank 14 cents to $83.11 per barrel in London. It gained 90 cents the previous session to $83.64.
The dollar declined to 140.50 yen from Tuesday’s 141.04 yen. The euro gained to $1.1070 from $1.1045.
