Global shares fall amid interest rate, earnings worries

Tokyo: European stocks declined on Monday, tracking losses in Asia as worries over interest rate hikes dominated an array of investor concerns.

The Shanghai Composite index sank 5.1 percent and Hong Kong fell 3.7 percent as China reinforced its stringent pandemic policies while case numbers rose.

Oil prices slipped more than USD4 per barrel, and the US dollar was trading near 128 Japanese yen.

France’s CAC 40 dropped 2.0 percent in early trading to 6,451.27.

The news that Emmanuel Macron won the run-off French presidential election over the weekend, clinching a second term as was widely expected, reassured markets that France won’t abruptly shift course in the midst of the war in Ukraine.

But the significant show by contender Marine Le Pen, a populist and nationalist, served as a reminder of how fragile that situation might be, analysts said.

Le Pen pledged to dilute French ties with the EU, NATO, and Germany and spoke out against EU sanctions on Russian energy supplies.

Germany’s DAX lost 1.4 percent to 13,943.88. Britain’s FTSE 100 shed 2.2 percent to 7,354.94. The future for the Dow industrials was down 0.7 percent while that for the S and P 500 fell 0.8 percent.

In Asian trading, Japan’s benchmark Nikkei 225 lost 1.9 percent to finish at 26,590.78.

South Korea’s Kospi slipped 1.8 percent to 2,657.13. Hong Kong’s Hang Seng dropped 770 points to 19,869.34, while the Shanghai Composite shed 158 points to 2,928.51, dipping below 3,000 for the first time since July 2020.

Hong Kong-traded shares in Internet company Baidu slumped 7 percent, while PetroChina lost 4 percent on falling oil prices.

“Coming after the heavy sell-off in Wall Street to end last week, overall risk appetite in the region may come under pressure as well,” said Yeap Jun Rong, market strategist at IG in Singapore.

Rising COVID-19 cases in China are setting off worries about more pandemic lockdowns that would crimp economic recoveries in the region. Beijing imposed lockdowns in several districts after case numbers rose.

Investors are also watching profit reports from companies, including Japanese big names that are coming in weeks ahead.

Several reports from US companies, which have already been released, have been disappointing, contributing to the fall that ended last week on Wall Street.

What the US Federal Reserve might do is high on investors’ minds. The chair of the Federal Reserve has indicated the central bank may hike short-term interest rates by double the usual amount at upcoming meetings, starting in two weeks. The Fed has already raised its key overnight rate once, the first such increase since 2018.

Markets around the world are feeling similar pressure on rates and inflation, particularly in Europe as the war in Ukraine pushes up oil, gas, and food costs.

In energy trading, benchmark US crude lost USD4.71 to USD97.36 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, fell from USD4.86 to USD101.29 a barrel.

In currency trading, the US dollar edged down to 128.11 Japanese yen from 128.59 yen. The euro cost USD1.07444, down from USD1.0803.