Thursday 20 September 2018

US inflation data shakes up global markets amid Fed hike fears

On Wall Street, the Dow Jones Industrial Average fell 291.39 points, or 1.11pc. Photo: Richard Drew/PA
On Wall Street, the Dow Jones Industrial Average fell 291.39 points, or 1.11pc. Photo: Richard Drew/PA

Reuters

The US dollar and bond yields jumped yesterday while stock markets fell as US data showed the strongest annual wage growth since 2009, raising the spectre of accelerating inflation and more US interest rate hikes than expected this year.

Yields on the 10-year US Treasury note shot up to a four-year high within five minutes of release of the Labor Department's unemployment report for January. The dollar surged against the Japanese yen, euro and a basket of six currencies.

The price of the benchmark 10-year Treasury note later fell further, pushing the yield up to 2.8525pc from 2.773pc late on Thursday.

Stocks in Europe and on Wall Street plunged at least 1pc on the news, as the strong jobs and wage growth data boosted the chances of four Fed rate hikes this year, instead of the three hikes analysts had expected thus far.

"What is good for the average American worker ends up being negative for stocks because it increases the odds of further rate hikes," said Michael Antonelli, managing director of institutional sales trading at Robert W Baird in Milwaukee.

MSCI's all-country world index of equity performance in 47 countries fell 1.07pc while its gauge of emerging market stocks lost 1.54pc.

The pan-European FTSEurofirst 300 index of leading regional shares lost 0.98pc and the STOXX 600 index tumbled 1.07pc.

On Wall Street, the Dow Jones Industrial Average fell 291.39 points, or 1.11pc.

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business