Bearish sentiment dominated stock markets earlier in the week with global equities and government bonds declining as the US dollar gripped a 2 -decade high after soaring US inflation readings added to concerns of more aggressive policy tightening by the central bank.
A series of readings of the highest US inflation data since December 1981, it indirectly underscores expectations of a more aggressive tightening of monetary policy by the Federal Reserve (Fed) in curbing inflation that could lead to a recession.
Commenting on the head of market strategy of SlateStone Wealth LLC, Ken Polcari, the Fed stated that it has controlled inflation but they may lose control.
He added that with a fall of 3,800 points in the S&P 500 index, it is only a matter of time before investors move out of the equity market.
Looking at the chart board, the Dow Jones Industrial average index fell 2.8%, the S&P 500 was down 3.9%and the Nasdaq Composite was down 4.7%.
Meanwhile, global stock indices fell 3.7% while European stocks fell 2.4% to a more than 3 -month low.
In Asia, China’s blue -chip shares fell 1.17% and Hong Kong’s Hang Seng was down 3.39% while Japan’s Nikkei was down 3.01% while Korea’s Kospi was down 3.52%.
Meanwhile, the greenback grabbed its highest level since 2002 as a result of a boost in US yields as the dollar index rallied 0.7% at 105.18.
The Japanese Yen rose 135.22 against the dollar while the British Pound fell 1.5% after United Kingdom (UK) economic data shrank in April.
As for commodities, Brent crude futures rose 0.21% at $ 122.27 a barrel as investors weighed in on the impact of tight global supply on weak demand amid global economic uncertainty.
One more thing, Bitcoin (BTC) has experienced a sharp decline of 11.7% since December 2020 at $ 23,462.
On a different side, this week there are several central bank meetings that will be the focus of the market including the Fed, Bank of England (BOE) and Swiss National Bank (SNB).
