WORLD CAPITALS, 31st August, 2022 (WAM) — As markets are betting that the US Federal Reserve and the ECB will both raise their key borrowing costs by 75 basis points when they meet next month, stock markets struggled to recover on Wednesday after a three-day losing streak, as stubborn inflation that has central banks on both sides of the Atlantic preparing to raise borrowing costs again next month kept investors on edge, Reuters reported.
Wall Street slipped after eking out early gains, while U.S. crude oil prices sank for a second day, with worries that tightening monetary policy around the world will hurt demand and drag on the global economy.
The MSCI all-country stock index slipped 0.2%, and was down 18.5% for the year as war in Ukraine, surging energy prices and rising interest rates take their toll on risky assets.
The U.S. S&P 500 index lost 0.17%, the Dow Jones Industrial Average fell 0.3%, and the Nasdaq Composite was flat.
Europe’s STOXX share index of 600 companies slumped 1.1% to a six-week low, leaving it down almost 15% for the year.
Economic news remained grim with overnight data showing economic activity in China, the world’s second-largest economy, extended its decline this month after new COVID-19 infections, the worst heatwaves in decades and struggles in the property sector.
Headline euro zone inflation for August rose to another record high, beating expectations and solidifying the case for a hefty rate hike by the European Central Bank on Sept. 8.
In the meantime, gold fell 0.4% to $1,715.4 an ounce, a one-month low. Crude oil fell further after declines of more than $5 overnight, but drew support after industry data showed U.S. fuel stocks fell more than expected.
U.S. West Texas Intermediate (WTI) crude futures were down 0.8% at $90.81 a barrel, after sliding $5.37 in the previous session, driven by recession fears. Brent crude futures for October fell 2.6%.
Cryptocurrencies defied the broader gloom, and held onto gains, with bitcoin up 1.4% at $20,086