Federal Reserve officials continued to indicate faster-than-expected interest rate hikes
Wall Street stocks turned lower, erasing early gains on Thursday, with tech stocks leading losses. The Nasdaq Composite fell 2.5%, while the S&P 500 and the Dow Jones shed 1.4% and 0.5%, respectively. On the data front, weekly jobless claims rose unexpectedly to 230,000 last week, while continuing claims improved to their lowest level since 1973. The producer price index saw a 9.7% year-over-year increase, marking the biggest jump on record in data going back to 2010.
Following suit, Asian stocks tumbled on Friday as Federal Reserve officials continued to indicate faster-than-expected interest rate hikes. China’s Shanghai Composite was down nearly 1% after fresh economic data showed that imports grew 19.5% year-on-year in December, coming in lower than expected and pointing to weakening domestic demand. South Korea’s Kospi fell 1.36% after the Bank of Korea hiked its interest rate to 1.25% earlier in the day.
In Europe, equities opened lower ahead of the weekend, following global momentum, with the pan-European Stoxx 600 shedding 0.5% in early trade. On the data front, the U.K. GDP grew by 0.9% in November, exceeding the pre-pandemic level for the first time. Furthermore, the UK manufacturing output arrived at 1.1% month-over-month in November versus 0.2% expectations. Still, the FTSE 100 was marginally lower in early deals.
In currencies, the dollar has been on the defensive for the fourth day in a row on Friday. The USD index dipped to the 94.60 area for the first time in two months before bouncing slightly in recent trading as risk sentiment keeps deteriorating, somehow capping the downside pressure surrounding the greenback. In the medium term, the buck will likely regain ground due to the Fed’s hawkishness.