BEIJING—Global stock markets and Wall Street futures mostly declined Thursday after the Federal Reserve said U.S. inflation is too high despite aggressive rate hikes, suggesting support for more increases.
London, Shanghai, Tokyo, and Hong Kong declined. Frankfurt opened higher. Oil prices edged up.
Notes released Wednesday from the Fed’s July 26–27 board meeting said inflation is “unacceptably high” despite signs U.S. economic growth is weakening. Board members saw “little evidence” inflation pressures are subsiding.
Investors worry aggressive rate hikes imposed by the Fed and central banks in Europe and Asia this year to tame inflation that is running at multi-decade highs might derail global economic growth.
The Fed notes raised “the prospects of further tightening,” while some investors see possible “excessive tightening dragging growth,” Venkateswaran Lavanya of Mizuho Bank said in a report.
In early trading, the FTSE 100 in London slipped 0.2 percent to 7,498.98 while Frankfurt’s DAX added 0.3 percent to 13,672.70. The CAC 40 in Paris gained 0.2 percent to 6,539.60.
On Wall Street, futures for the benchmark S&P 500 index and the Dow Jones Industrial Average were off 0.3 percent.
In Asia, the Shanghai Composite Index lost 0.5 percent to 3,277.54 and the Nikkei 225 in Tokyo fell 1 percent to 28,942.14. The Hang Seng in Hong Kong sank 0.8 percent to 19,763.91.
The Kospi in Seoul retreated 0.3 percent to 2,508.05 and Sydney’s S&P-ASX 200 was down 0.2 percent at 7,112.80.
India’s Sensex lost 0.3 percent to 60,064.94. New Zealand and Bangkok declined while Singapore and Jakarta advanced.
On Wall Street, the S&P 500 tumbled 0.7 percent on Wednesday, wiping out the week’s gains. That left the index down 0.1 percent since Monday.
The Dow sank 0.5 percent and the Nasdaq slid 1.3 percent.
The Fed notes made clear the board plans to keep raising rates but gave no indication when or by how much.
The U.S. central bank has hiked its benchmark lending rate twice this year by 0.75 percentage points, triple its usual margin. Forecasters say a hike of the same size is possible at its September meeting, though the likelihood has declined as data show the economy weakening.
The Commerce Department reported July retail sales were flat compared with the previous month, defying predictions of a slight increase. Retailers have warned high inflation will discourage consumers from spending on non-essentials.
Retail chain Target fell 2.7 percent after reporting a nearly 90 percent plunge in second quarter profits. Children’s clothing and accessories chain Children’s Place fell 11 percent after reporting a surprise loss due to supply problems and pressure from inflation.
Technology and communications stocks also fell.
In energy markets, benchmark U.S. crude rose 18 cents to $88.29 per barrel in electronic trading on the New York Mercantile Exchange. It jumped $1.58 to $88.11 on Wednesday. Brent crude, the price basis for international trading, gained 37 cents to $94.02 per barrel in London. It surged $1.31 the previous session to $93.65.
The dollar rose to 135.28 yen from Wednesday’s 135.05 yen. The euro edged down to $1.0163 from $1.0169.
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