European and Asian markets slide after Fed minutes suggest more rate hikes

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European shares fell sharply on Thursday, following Asian ones, minutes after the Federal Reserve’s last meeting indicated that the US central bank plans to raise interest rates further to combat inflation.

The pan-European Stoxx 600 declined 0.8 percent, higher than the previous day, while France’s CAC 40 fell 1.3 percent and London’s FTSE 100 fell 0.7 percent. Companies sensitive to consumer spending declined across the board, with travel and leisure stocks such as Tui and International Airlines Group down 3.7 percent and 3.3 percent, respectively.

The decline followed sharp comments from US central bank officials, with minutes from a June meeting of the rate-setting Federal Open Market Committee indicating that “nearly all” participating officials believed the Fed’s An additional increase in the benchmark rate would be “appropriate”. He also described inflation as “unacceptably high”.

The June meeting broke the Fed’s sustained drive to reduce inflation from multi-decade highs last year. It was the first time the US central bank opted to keep the federal funds rate unchanged at 10 consecutive meetings.

On Wall Street, stocks closed at the day’s low after the release of the details, with both the broader S&P 500 index and the tech-focused Nasdaq Composite down 0.2 percent.

The yield on the policy-sensitive two-year Treasury rose 0.02 percentage points to 4.97 percent, reaching its highest point since the regional banking crisis in early March. The yield on the benchmark 10-year note rose by the same amount to 3.96 per cent. Bond yields rise as prices fall.

Stephen Innes, managing partner at SPI Asset Management in Hong Kong, said: “Assuming that the upcoming employment and consumer price index reports will continue the themes that troubled (Fed officials) last month, we believe the rate cut on July 26 will continue.” The potential for growth has increased. ,

Futures contracts pointed to the S&P 500 opening 0.4 percent lower on Thursday, while contracts tracking the Nasdaq 100 slipped 0.5 percent.

US payroll data is due for release on Friday, with economists polled by Bloomberg forecast that the pace of hiring will slow in June. However, the median forecast underestimated the jobs data for 14 consecutive months.

Markets ended lower, with Hong Kong’s Hang Seng index down 3.1 percent, while Australia’s S&P/ASX 200 and Japan’s Topix lost 1.2 percent and 1.3 percent, respectively. In China, the CSI 300 index of Shanghai- and Shenzhen-listed shares fell 0.7 percent.

Sentiment was also weighed down by rising expectations of monetary easing in Hong Kong, which could lower Chinese banks’ returns. The Hang Seng Mainland Bank index was down about 6 per cent, with some banks trading higher ex-dividend.

“If you lower interest rates, it means banks’ profits will fall, and the renminbi will also test lower,” said Lewis Tse, founder of Hong Kong-based Wealthy Securities. “These factors are prompting investors to sell Chinese bank stocks.”