The United States (US) inflation rate reached 8%, further making global stock markets fall as investors are almost certain that the Federal Reserve (Fed) will raise rates at next week’s meeting while the European Central Bank (ECB) will end its stimulus program sooner.
Panic Sentiment Dominates the Market
Data showed U.S. consumer inflation reached an annual rate of 7.9% in February, the highest annual rate of rise in 40 years, further prompting Wall Street to retreat from yesterday’s positive rally.
In addition, the ECB is said to be halting its market stimulus program this summer to make way for an increase in interest rates due to soaring inflation.
Adding to the grief, the Russian-Ukrainian talks were seen as failing to bear any results, trapping hundreds of thousands of civilians in previously attacked Ukrainian cities.
According to Qontigo’s managing director of applied research, Marissa Brown, inflation is at the starting point between good inflation and bad inflation, so it drives higher volatility and usually such volatile sentiment makes investors turn away.
As a result, the MSCI benchmark of worldwide stocks fell 0.34%.
The Dow Jones Industrial average index fell 182.71 points or 0.55% at 33,103.54, the S&P 500 lost 26.26 points or 0.61% at 4,251.62 and the Nasdaq Composite was down 143.49 points or 1.08% at 13,112.06.
The European pan STOXX 600 index lost 1.69%.
The dollar index strengthened 0.534% while the Euro plunged 0.81% at $ 1.0985 after the ECB’s announcement that suppressed a positive rally yesterday.
Commodity Markets Face a Similar Story
Senior U.S. economist at Ned Davis Research, Veneta Dimitrova, expects commodity and energy markets affected by the Russia-Ukraine war will result in a longer period of inflation.
He added that the Fed is expected to face a difficult path with the geopolitical crisis and market uncertainty haunting the market.
OPEC's statement that it will produce more oil to close the gap in Russia's oil exports has caused oil prices to fall during trading.
US crude futures fell 2.47% at $ 106.02 a barrel while international benchmark Brent oil fell 1.63% at $ 109.33 a barrel.
Meanwhile, a draft declaration by European Union (EU) leaders announced that they would stop buying oil, gas and coal from Russia in stages due to US sanctions.
Moreover, cryptocurrency risky assets fell with Bitcoin declining 6.5%.
