Interest rates

FirstFT: US stocks fall as global interest rates rise

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Shares sold sharply in the United States on Thursday after Switzerland and the United Kingdom joined a global rush to raise interest rates, fueling fears that central banks’ attempts to rein in high inflation only push economies around the world into a downturn.

The S&P 500 stock index slid 3.2% for the day, a move that sent the broad gauge down 6% this week. The declines have hurt valuations in recent days as pessimism about the global economic outlook has spread, with many investors warning that tighter monetary policies from central banks could stifle the recovery.

In a sign of the darkening outlook, nearly all stocks in the S&P 500 fell on Thursday, with losses sending stock prices of hundreds of companies plummeting to new 52-week lows. The tech-heavy Nasdaq Composite Index fell 4.1%.

The S&P had closed the previous session up 1.5% after the Federal Reserve raised its main interest rate by a historic 0.75 percentage points, tempered by comments from Chairman Jay Powell saying he was expected hikes of this magnitude to be relatively rare.

Learn more about global inflation:

  • Analysis: The Fed’s all-out inflation fight makes a “soft” landing harder to achieve, writes Colby Smith.

  • In-depth news: While the past week has brought back memories of the Eurozone debt crisis, there are big differences between yesterday and today.

  • Opinion: In the fight against inflation, Fed Chairman Jay Powell is waging a battle not only in the markets, but also with the minds of consumers, writes Gillian Tett.

  • Tracker: See how your country compares to rising prices with our global inflation tracker.

Thanks for reading FirstFT Asia and here’s the rest of the news from the day — Emily

1. European leaders support Ukraine’s application for EU membership Leaders of France, Germany, Italy and Romania on Thursday pledged support for Ukraine’s bid for EU membership after visiting Kyiv and meeting President Volodymyr Zelensky to show their support in the face of the Russian invasion. For more on the latest news on the impact of war on business and the economy, Register to our Disrupted Times newsletter.

2. Trump was told that canceling the election was illegal Donald Trump has pressured his Vice President Mike Pence to cancel the 2020 election despite being repeatedly told it would be illegal, a congressional committee has heard. Members of the bipartisan panel investigating the attack on the US Congress were told that Pence had made clear his opposition to the former president’s plan, including in a stormy phone call on the morning of Jan. 6.

3. Musk tells Twitter employees about his plan for the future of the company Elon Musk has warned Twitter employees his company needs to ‘recover’ and undergo ‘downsizing’ as he speaks directly to employees at the social media platform for the first time since launching his offering public purchase of 44 billion dollars.

4. China will set up a centralized iron ore buyer China is set to consolidate the country’s iron ore imports through a new centrally controlled group by the end of this year, as Xi Jinping’s administration seeks to increase the power of Beijing’s price fixing on the industry – and in particular to counter Australia’s dominance.

5. Reliance targets diesel exports using cheap Russian crude Indian refiners, including Mukesh Ambani’s Reliance Industries, are using cheap Russian crude to try to boost diesel exports, including to destinations such as the EU with Russian oil sanctions.

  • More energy news: The United States is urging European capitals to look for ways to mitigate the impact of its ban on insuring Russian oil shipments, arguing the move could drive up global crude prices.

The coming days

Decision on interest rates in Japan The Bank of Japan’s Monetary Policy Committee will announce its decision on interest rates today. Governor Haruhiko Kuroda is expected to stay one of the solitary doves amid an increasingly hawkish prospect globally. (Bloomberg)

Prime Minister of Solomon Islands receives Australian Foreign Minister Prime Minister Manasseh Sogavare to meet Australian Penny Wong to discuss concerns on the national security agreement with China. (Reuters)

EU officials expected to issue recommendation on Ukraine The European Commission is expected to recommend today that Ukraine be granted EU candidate status, the first step towards membership.

Sunday elections Colombia will hold its second round of voting in its presidential election on Sunday. In France, which must organize its second round of voting in its legislative elections, the competition was dominated by three people. What does this mean for the stability of the country?

What else we read

‘Let it rot’: China’s tech workers struggle to find jobs Over the past year, China’s once overburdened but well-paid tech workers have seen an erosion of office benefits, job cuts, staffing freezes and declining or falling wages. The problems faced by unprofitable small businesses have gradually spread to highly profitable groups, including social media group Tencent and e-commerce leader Alibaba.

Sales slow in Sydney’s maritime suburbs Bargains are increasingly common in Sydney as house prices fall. The median selling price of a home fell 1.5% between January and May, after rising 25.5% in the previous 12 months, according to the index from CoreLogic, a real estate data provider. Rising interest rates are a big part of Sydney’s slowdown.

  • Related readings: Soaring house prices in New Zealand are fading as rate hikes bite, while US mortgage rates have jumped the most since 1987. here to receive our House & Home newsletter.

Why we trust scammers From Enron to Wirecard, elaborate scams can go undetected long after the warning signs appear. Left in the ashes, however, is a much larger question that haunts all victims of such financial fraud: how the hell did they get away with it for so long?

Chinese Courts Strengthen IP Across Borders Since 2020, companies in the world’s second-largest economy have surpassed their American rivals in the number of new patents they obtain each year. There are also signs that Chinese companies are turning the tables on their foreign counterparts in aggressive intellectual property litigation – a move that appears to have been backed by the country’s courts.

Inside ‘soft parenting’ Today’s parents largely believe that physical punishment such as spanking makes little difference to a child’s misbehavior and should be avoided, in part because toddlers find it difficult to control their impulses because their prefrontal cortex is not fully developed. This is why the movement is stress some parents.

Thank you to the readers who responded to our survey yesterday. Forty-six percent of those polled said President Joe Biden was right to visit Saudi Arabia.

Travel

Japan’s long-awaited lifting of the ban on foreign tourists coincides with the launch of striking new works – and a new hotel – on the island of Naoshima.

One of the six bedrooms, accessible by private monorail, that make up the oval building of Benesse House

One of six rooms, accessible by private monorail, that make up the oval building of Benesse House © © Osamu Watanabe

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