Investors are still thinking over the Federal Reserve's signal that it may raise current ultra-low interest rates sooner than expected
Investors are still thinking over the Federal Reserve's signal that it may raise current ultra-low interest rates sooner than expected

World markets were mixed on Monday after a sell-off Friday on Wall Street gave the S&P 500 its worst weekly loss since February.

Japan's benchmark fell 3.3 percent but shares rose in London and Frankfurt. US futures were higher.

Investors are still thinking over the Federal Reserve's signal that it may raise current ultra-low interest rates sooner than expected and slow its market-supporting bond purchases.

Part of the Fed's mission is to keep prices under control. The fear is that burgeoning inflation may prompt central banks to dial back the lavish support that has lifted markets to new highs after they plunged at the onset of the coronavirus pandemic last year.

Until its latest policy meeting, last week, the Fed had indicated it viewed recent price hikes as transient and would let the recovering economy run hot. Now it''s forecasting raising interest rates twice in 2023.

Asian markets opened mostly lower early Monday but the losses were contained.

In Europe, Germany's DAX gained 0.3 percent to 15,493.53 and the CAC 40 in Paris edged 0.1 percent higher, to 6,573.41. In London, the FTSE 100 inched up less than 0.1 percent, to 7,021.31. The future for the S&P 500 gained 0.4 percent while that for the Dow industrials climbed 0.5 percent.

In Asian trading, the Nikkei 225 gave up 953 points to 28,010.93 and the Kospi in Seoul lost 0.8 percent to 3,240.79. Hong Kong's Hang Seng index lost 1.1 percent to 28,489.00. Australia's S&P/ASX 200 declined 1.8 percent to 7,235.30.

The Shanghai Composite index edged 0.1 percent higher, to 3,529.18.

India's Sensex gained 0.4 percent and Thailand's benchmark fell 0.8 percent.

On Friday, the S&P 500 fell 1.3 percent to 4,166.45 in a broad retreat, while the Dow Jones Industrial Average lost 1.6 percent, to 33,290.08. The Nasdaq composite fell 0.9 percent to 14,030.38.

Markets were spooked after St Louis Federal Reserve President James Bullard told CNBC he expects the first rate increase may come as soon as next year.

The Fed also has begun talks about slowing its $120 billion of monthly bond purchases, which are helping to keep mortgages and other longer-term borrowing cheap. But the Fed's chair has said such a tapering is still likely a ways away.

Any pullback in Fed support would be a big change for markets, which have been feasting on ultra-low rates for more than a year.

The major US stock indexes remain relatively close to their record highs as the economy powers its way out of the recession caused by the pandemic. The S&P 500 is only about 2% below its all-time high set on Monday, and the Dow is within 5 percent of its record set last month.

The 10-year Treasury yield was steady at 1.43 percent.

In other trading, US benchmark crude oil rose 40 cents to $72.04 per barrel in electronic trading on the New York Mercantile Exchange. It gained 60 cents to $71.64 on Friday. Brent crude, the international standard, picked up 38 cents to $73.89 per barrel.

The US dollar was at 110.10 Japanese yen, down from 110.27 on Friday. The euro rose to $1.1898 from $1.1861.

(To receive our E-paper on whatsapp daily, please click here. We permit sharing of the paper's PDF on WhatsApp and other social media platforms.)

Free Press Journal

www.freepressjournal.in