The world's major equity markets witnessed the biggest sell-off in 2 years as the United States (US) consumer price index (CPI) data rose unexpectedly.
Encouraging developments in the monthly reading of the CPI data, up 0.1% from the monthly forecast of -0.1%, restored the strengthening of the dollar which further broke the previous 4-day profit rally in the stock market.
As a result, investor concerns about the implementation of more aggressive interest rate hikes by the Federal Reserve (Fed) returned and tarnished confidence in risky assets such as stocks.
Looking at the index chart in the US, the Dow Jones Industrial fell 3.94% at 31,104.97 while the S&P 500 fell 4.32% at 3,932.69 and the Nasdaq Composite lost 5.16% at 11,633.57.
The loss suffered by Wall Street was the biggest daily decline since June 2020 which Terry Sandven of US Bank Wealth Management explained that it gives a clear picture of the Fed's interest rate prospects in curbing inflation.
Overall MSCI's index of worldwide shares plunged 3.39%, the biggest drop since June 13.
In the Asian region, Japan's Nikkei 225 fell 2.8%, Topix fell 2.19%, South Korea's Kospi lost 2.58% and Kosdaq lost 2.66%.
The S&P/ASX 200 index plunged 2.47% while MSCI's broadest gauge of Asia Pacific shares outside Japan fell 1.16%.
The currency summary showed the dollar index gaining 1.534% with the Euro down 1.46% at $0.9971, the Japanese Yen down 1.17% at ¥144.52, the Pound down 1.54% at $1.1499.
Along with the rise, US Treasury yields also rose, turning on the recession warning light as the yield curve inverted widened after the CPI beat bond investors' expectations.
