US Rate Hike Hopes Hinder Global Stocks

Shares in Europe and Asia fell on Tuesday as speculation intensified that the Federal Reserve could raise U.S. interest rates sooner than many expect, although this failed to give the dollar a significant boost.

Forecast-beating jobs data last Friday has triggered concerns the Fed could hike rates for the first time since 2006 as soon as September. Those worries looked set to push U.S. stocks lower on Tuesday, index futures indicated ESc1 SPc1.

The pan-European FTSEurofirst 300 index fell 0.7 percent to its lowest since mid-February, down for the sixth consecutive day. HSBC shares (HSBA.L) fell 1.1 after it announced a plan to cut up to 50,000 jobs and shrink its investment bank.

“We have had a pickup in some of the U.S. economic indicators and this development tends to go hand in hand with increasing rate hikes fears,” said Robert Parkes, equity strategist at HSBC Global Research. Earlier, Tokyo’s Nikkei index .N225 suffered its biggest fall in nearly a month, down 1.8 percent on U.S. rate worries and uncertainty over whether Greece can clinch a deal with its creditors to avoid default.

MSCI’s main index of Asia-Pacific shares outside Japan .MIAPJ0000PUS shed 0.8 percent to a fresh 10-week low.

Chinese shares eased after soft inflation data suggested the economy was still struggling, even through Beijing is expected to add more policy stimulus.

The CSI300 index .CSI300 of the largest listed companies in Shanghai and Shenzhen fell 0.7 percent.

MSCI will soon announce whether to include China ‘A’ shares in its Emerging Markets Index, a decision the index publisher says would draw $400 billion to China stocks over time.

On Monday, a 0.5 percent fall in the Dow Jones Industrial average .DJI saw the index slip into a loss for 2015.

via Reuters

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza