BANGKOK, Dec. 6 (AP) – World stocks were mostly lower on Tuesday after Wall Street pulled back as a surprisingly strong economic report highlighted the challenge the Federal Reserve faces in fighting inflation.
Germany’s DAX fell 0.2 percent to 14,421.84 and the Paris CAC 40 also fell 0.2 percent to 6,682.03. Britain’s FTSE 100 index fell 0.3 percent to 6,679.98. S&P 500 and Dow futures fell 0.1%.
Underscoring fears of a recession, Fitch Ratings cut its forecast for world economic growth on Tuesday to reflect rate hikes by the Federal Reserve and other central banks.
The rating agency’s Global Economic Prospects report estimated global economic growth of 1.4% in 2023, down from its September forecast of 1.7%. It lowered US growth to 0.2% from 0.5% in 2023 as the pace of monetary policy tightening picks up.
China’s growth forecast was revised down to 4.1% from 4.5%.
Markets were buoyed by expectations that China would continue to ease its strict pandemic restrictions, easing pressure on trade, manufacturing and consumer spending.
During Asian trading hours, Hong Kong’s Hang Seng lost 0.4% to 19,441.18 and South Korea’s Kospi lost 1.1% to 2,393.16. The Shanghai Composite was flat at 3,212.53.
Tokyo’s Nikkei 225 index closed up 0.2 percent at 27,885.87.
Stocks in Bangkok and Taiwan fell.
Investors have been hoping that the Federal Reserve may slow the pace of its rate hikes aimed at curbing persistently high inflation.
The services sector, which makes up the largest part of the U.S. economy, posted impressive growth in November, the Institute for Supply Management reported Monday. Business orders at U.S. factories and orders for durable goods also rose more than expected in October.
The news is positive for the broader economy, but it complicates the Fed’s fight against inflation, as it could mean the central bank will have to keep raising interest rates to reduce price pressures.
“Inflation is likely to get trickier and the service sector of the economy is not going to weaken. The risk that the Fed may need to do more remains high,” Oanda’s Edward Moya said in a statement.
The Federal Reserve meets next week and is expected to raise rates by half a percentage point, which would mark a moderation from a steady three-quarter percentage point increase. It has raised its benchmark interest rate six times since March, pushing it to a range of 3.75% to 4%, the highest level in 15 years. Wall Street expects the benchmark rate to peak in a range of 5% to 5.25% in mid-2023.
The aim is to cool growth without slamming the brakes on it, which could lead to a recession sweeping the global economy, slowing trade and consumer spending.
The S&P 500 fell 1.8% on Monday, while the Dow Jones Industrial Average fell 1.4%. The tech-heavy Nasdaq fell 1.9 percent, while the Russell 2000 fell 2.8 percent.
A weekly update on U.S. jobless claims is due on Thursday, while the monthly report on producer prices for November is due on Friday.
In other trading on Tuesday, U.S. benchmark crude fell 84 cents to $76.09 a barrel in electronic trading on the New York Mercantile Exchange. It fell $3.05 a barrel to $76.93 on Monday.
Brent crude, the pricing basis for international trades, fell 89 cents to $81.79 a barrel.
The dollar fell to 136.54 yen against the yen from 136.71 yen late on Monday. The euro climbed to $1.0496 from $1.0491. (Associated Press)
(This is an unedited and auto-generated story from a Syndicated News feed, the content body may not have been modified or edited by LatestLY staff)