US inflation hit a fresh 40-year high in February, raising economic concerns
Wall Street stocks failed to extend recovery from the previous session and resumed the decline overnight. Investors were disappointed by failed peace talks between Ukraine and Russia. Also on the negative side, US inflation hit a fresh 40-year high in February, with the consumer-price index up 7.9% from a year earlier. The data added to worries about the state of the country’s economy as the Fed plans to start raising interest rates next week.
In individual stocks, shares of Amazon railed 5.4% after the company announced a 20-for-1 stock split and $10 billion buyback. Goldman dropped 1.1% after announcing it is shuttering its Russia business. As such, the Dow Jones Industrial Average dipped 0.34%, the S&P 500 shed 0.4%, and the technology-focused Nasdaq Composite fell 1%.
Asian equity markets were mostly down on Friday as high US inflation along with hawkish ECB bolstered expectations for more aggressive rate hikes globally. MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 1.7% while Japan’s Nikkei 225 lost 2.05%. South Korean Kospi shed 0.7% and Australian shares dropped 0.9 per cent while China’s Shanghai Composite reversed early losses to finish 0.4% higher ahead of the weekend. U.S. futures keep trading lower, suggesting caution remains as the war in Ukraine showed no sign of easing.
In Europe, however, stocks opened slightly higher to start the day. In part, some improvement in sentiment was due to the latest remarks by ECB officials. In particular, Villeroy said inflation should get back down to around 2%, and other central banks are taking a much harder line on response to inflation. Meanwhile, the ECB policymaker Olli Rehn said that any adjustment to key rates will be gradual. On the data front, Germany’s February final CPI came in at +5.1%, in line with the preliminary estimate.