Global equities sank Wednesday and oil prices retreated as Federal Reserve meeting minutes added to expectations for aggressive central bank monetary tightening.
Several US Federal Reserve officials supported raising interest rates by half a percentage point in the future to combat inflation, according to minutes of the central bank’s meeting last month.
Officials also discussed lowering their bond holdings by a total of $95 million per month as soon as the upcoming May 3-4 meeting, according to the minutes.
The disclosures added to a stream of hawkish commentary from Fed officials, exacerbating worries that the central bank’s efforts to rein in prices could harm economic growth.
“The markets remain unnerved by the economic implications of a highly aggressive Fed and a potential policy mistake,” Charles Schwab investment bank said in a note.
Wall Street tumbled for a second straight session, with the S&P 500 losing one percent and large tech equities like Amazon, Facebook parent Meta and Microsoft all shedding more than three percent.
Earlier, Asian and European bourses retreated, while the euro hit a one-month low.
“Investor confidence might have improved from the low point in early March when the Ukraine war was unfolding,” said AJ Bell investment director Russ Mould.
“However, there remain significant headwinds for equities and the latest trouble spot is what the Federal Reserve might do to curb inflation.”
Worries about a potential slowing of the economy due to higher interest rates also weighed on oil prices, which dropped more than five percent.
Analysts also pointed to an announcement from the International Energy Agency outlining plans to release crude stockpiles after Russia’s invasion of Ukraine destabilized oil markets.
Data from the US Energy Information Administration also showed a surprise build in crude inventories.
“It seems that the concerns are a little bit of weakness in demand short term, which is raising concerns of some demand destruction, along with the Federal Reserve minutes today,” said Phil Flynn, analyst at the Price Futures Group.
The retreat in crude prices came as Democrats in the US Congress pressed CEOs from ExxonMobil, Chevron and other oil giants on the reasons for spiking gasoline prices.
Oil executives rejected suggestions they had withheld supply to drive up prices and said they are in the process of increasing investments in response to higher commodity prices.
– Key figures around 2100 GMT –
New York – Dow: DOWN 0.4 percent at 34,496.51 (close)
New York – S&P 500: DOWN 1.0 percent at 4,481.15 (close)
New York – Nasdaq: DOWN 2.2 percent at 13,888.82 (close)
London – FTSE 100: DOWN 0.3 percent at 7,587.70 points (close)
Frankfurt – DAX: DOWN 1.9 percent at 14,151.69 (close)
Paris – CAC 40: DOWN 2.2 percent at 6,498.83 (close)
EURO STOXX 50: DOWN 2.4 percent at 3,824.69 (close)
Tokyo – Nikkei 225: DOWN 1.6 percent at 27,350.30 (close)
Hong Kong – Hang Seng Index: DOWN 1.9 percent at 22,080.52 (close)
Shanghai – Composite: FLAT at 3,283.43 (close)
Brent North Sea crude: DOWN 5.2 percent at $101.07 per barrel
West Texas Intermediate: DOWN 5.6 percent at $96.23 per barrel
Euro/dollar: DOWN at $1.0900 from $1.0905 late Tuesday
Pound/dollar: DOWN at $1.3071 from $1.3074
Euro/pound: DOWN at 83.38 pence from 83.41 pence
Dollar/yen: UP at 123.79 yen from 123.60 yen
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