Global equities are falling as inflation fears investors are making noise

Shares fell on Thursday in Europe and Asia-Pacific as a U.S. inflation scare that brought Wall Street down in the previous session went through world stock markets.

The European Stoxx 600 index fell 0.8% in the first trades, while the UK FTSE 100 fell 1.3%.

Japan’s Topix closed 1.5% lower, bringing the week’s losses to 4.4%. China’s CSI 300 index of listed shares in Shanghai and Shenzhen fell 1.2%. All other major Asian courses were also in red.

The losses occurred after official data was shown in the US inflation rose 4.2 percent year after year in April, with prices rising at a faster rate than economists had predicted.

The lecture creepy markets, with the S&P 500 closing 2.2 percent, the worst performance on a benchmark Wall Street day since February.

The prospect of higher and sustained inflation can depress equity and debt markets, as it reduces real returns on dividends or fixed interest payments, leading to lower stock prices and bonds.

The ten-year US Treasury yield, which moves inversely to its price, rose during the New York trading on Wednesday before stabilizing during the first European session at 1.674%, with a fall of 0.03 points percentages.

Wednesday’s data also boosted speculation that the U.S. Federal Reserve, the world’s most powerful central bank, could accelerate its timeline to cut its $ 120 billion bond purchases that have supported financial markets since last March.

This week, a senior Federal Reserve official downplayed inflation risks as “transient wave”.

“The Fed’s insistence that inflation is only transitory has an audience,” said Tai Hui, chief market strategist for JPMorgan Asset Management’s Asian market. “But if inflation data doesn’t calm down in the coming months, challenging its credibility could be detrimental.”

Technology stocks were hit hard in the United States, with a Nasdaq falling 2.7%. They also weakened in Europe and Asia. Valuations in the sector had increased during the pandemic as closed families bought and socialized online, but are now considered especially vulnerable to market correction.

In Hong Kong, Tencent and Alibaba fell more than 2%. Tokyo-listed technology conglomerate SoftBank lost 2.7% despite publishing the the highest profit recorded for a Japanese company a day before. The Stoxx technology subscale fell 1%.

Taiwan’s highly technological Taiex index fell to 3.4% before comparing most of those losses. The country’s benchmark also has it suffered this week on a resurgence of Covid-19.

U.S. inflation data came after a global period commodity prices have jumped, due to strong demand and narrow supply. Investors also consider them a protection against inflation. Iron ore prices hit a record dollar on Monday.

The commodity boom pushed China’s production price index (a measure of inflation at factory doors) highest level in three years in April, although growth in the country’s consumer price index remained below 1%.

On Thursday, most commodities, including iron ore and crude, fell. International benchmark Brent oil crude fell 1.4% to $ 68.33 a barrel. The Colonial gas pipeline in the USA, which transports fuel throughout the country, resumed operations Wednesday after being shut down last Friday by a cyberattack.

Gold rose 0.2 percent to $ 1,819.76 per troy ounce.