World

Markets extended a global sell-off Friday after the European Central Bank laid the groundwork to join others in a programme of interest rate hikes, while attention turns to the release of key US inflation data.

After a largely positive start to the week, Asian investors tracked their US and European colleagues in selling up as they contemplate higher borrowing costs and surging prices, which many fear could lead to a recession.

Adding to the unease was news that officials in China had once again locked down millions of people for Covid testing due to another flare-up in cases, dealing a blow to hopes for an economic reopening.

Still, the move helped push down oil prices — a key driver of global inflation — owing to concerns about the impact on demand.

With prices rising at a decades-high pace, central banks have been forced to withdraw the vast financial support measures put in place to combat the impact of the pandemic that helped fuel a rally across markets to record or multi-year highs.

The ECB became the latest to join the tightening campaign, announcing Thursday the end of its bond-buying programme and signalling it will hike rates several times this year.

It also sharply upgraded its inflation forecasts for this year and next while lowering the economic growth outlook.

Focus now turns to the release of US consumer price figures later Friday, with a strong reading likely to give the Federal Reserve more room to be aggressive.

“A robust May… print will probably prompt (policymakers) to hint at a 50 basis point hike for the September meeting,” said SPI Asset Management’s Stephen Innes.

“The tone will remain hawkish and the tough talk on inflation will continue.”

However, he added that “the significant upward revisions to core inflation projections are close to ending. Risk markets could take solace if one or two participants shift to seeing the inflation outlook is more balanced”.

Expectations are that the Fed will hike by half a point for at least three more meetings before January. 

Other commentators also suggested that traders were looking for signs inflation may be close to its highs.

“The big question is whether inflation has peaked or not,” said Matthew Simpson of StoneX Financial. 

“Inflation may have softened to a degree in April, but traders really want to see further evidence that inflation is pointing lower to call ‘peak inflation’ with confidence.

“Besides, one single month of data doesn’t define a trend.”

And OANDA’s Edward Moya said the darkening outlook could provide an argument for the Fed to apply the brakes to hiking later in the year.

“Warning signs about the economy are emerging as weekly jobless claims are starting to rise, China’s Covid situation will prove troublesome for supply chains over the next couple of quarters, and as inflationary pressures broaden and show no sign of easing.

“It seems reductions in global growth forecasts will become a steady theme over the next few months and that should complicate how much more tightening we see from central banks.”

Tokyo, Hong Kong, Sydney, Seoul, Singapore, Taipei, Mumbai, Bangkok, Wellington, Manila and Jakarta were all down.

London, Paris and Frankfurt were also lower in early trade.

However, data showing Chinese producer price inflation eased last month to its lowest level in more than a year provided some cheer and gave officials a little room to unveil fresh stimulus measures for the beleaguered economy.

That helped Shanghai brush off the targeted lockdowns and buck the regional trend to rally more than one percent.

On currency markets the euro continued to struggle against the dollar after the ECB flagged a quarter-point hike, while the yen remained around two-decade lows to the greenback.

– Key figures at around 0810 GMT –

Tokyo – Nikkei 225: DOWN 1.5 percent at 27,824.29 (close)

Hong Kong – Hang Seng Index: DOWN 0.3 percent at 21,806.18 (close)

Shanghai – Composite: UP 1.4 percent at 3,284.83 (close)

London – FTSE 100: UP 1.0 percent at 7,405.26

Euro/dollar: UP at $1.0630 from $1.0620 late Thursday

Euro/pound: UP at 85.15 pence from 84.98 pence

Dollar/yen: DOWN at 133.71 yen from 134.40 yen

Pound/dollar: DOWN at $1.2482 from $1.2495

Brent North Sea crude: DOWN 0.7 percent at $122.27 per barrel

West Texas Intermediate: DOWN 0.6 percent at $120.76 per barrel

New York – Dow: DOWN 1.9 percent at 32,272.79 (close)

Markets extended a global sell-off Friday after the European Central Bank laid the groundwork to join others in a programme of interest rate hikes, while attention turns to the release of key US inflation data.

After a largely positive start to the week, Asian investors tracked their US and European colleagues in selling up as they contemplate higher borrowing costs and surging prices, which many fear could lead to a recession.

Adding to the unease was news that officials in China had once again locked down millions of people for Covid testing due to another flare-up in cases, dealing a blow to hopes for an economic reopening.

Still, the move helped push down oil prices — a key driver of global inflation — owing to concerns about the impact on demand.

With prices rising at a decades-high pace, central banks have been forced to withdraw the vast financial support measures put in place to combat the impact of the pandemic that helped fuel a rally across markets to record or multi-year highs.

The ECB became the latest to join the tightening campaign, announcing Thursday the end of its bond-buying programme and signalling it will hike rates several times this year.

It also sharply upgraded its inflation forecasts for this year and next while lowering the economic growth outlook.

Focus now turns to the release of US consumer price figures later Friday, with a strong reading likely to give the Federal Reserve more room to be aggressive.

“A robust May… print will probably prompt (policymakers) to hint at a 50 basis point hike for the September meeting,” said SPI Asset Management’s Stephen Innes.

“The tone will remain hawkish and the tough talk on inflation will continue.”

However, he added that “the significant upward revisions to core inflation projections are close to ending. Risk markets could take solace if one or two participants shift to seeing the inflation outlook is more balanced”.

Expectations are that the Fed will hike by half a point for at least three more meetings before January. 

Other commentators also suggested that traders were looking for signs inflation may be close to its highs.

“The big question is whether inflation has peaked or not,” said Matthew Simpson of StoneX Financial. 

“Inflation may have softened to a degree in April, but traders really want to see further evidence that inflation is pointing lower to call ‘peak inflation’ with confidence.

“Besides, one single month of data doesn’t define a trend.”

And OANDA’s Edward Moya said the darkening outlook could provide an argument for the Fed to apply the brakes to hiking later in the year.

“Warning signs about the economy are emerging as weekly jobless claims are starting to rise, China’s Covid situation will prove troublesome for supply chains over the next couple of quarters, and as inflationary pressures broaden and show no sign of easing.

“It seems reductions in global growth forecasts will become a steady theme over the next few months and that should complicate how much more tightening we see from central banks.”

Tokyo, Hong Kong, Sydney, Seoul, Singapore, Taipei, Mumbai, Bangkok, Wellington, Manila and Jakarta were all down.

London, Paris and Frankfurt opened down.

However, data showing Chinese producer price inflation eased last month to its lowest level in more than a year provided some cheer and gave officials a little room to unveil fresh stimulus measures for the beleaguered economy.

That helped Shanghai brush off the targeted lockdowns and buck the regional trend to rally more than one percent.

On currency markets the euro continued to struggle against the dollar after the ECB flagged a quarter-point hike, while the yen remained around two-decade lows to the greenback.

– Key figures at around 0720 GMT –

Tokyo – Nikkei 225: DOWN 1.5 percent at 27,824.29 (close)

Hong Kong – Hang Seng Index: DOWN 0.1 percent at 21,855.18

Shanghai – Composite: UP 1.4 percent at 3,284.83 (close)

London – FTSE 100: DOWN 0.5 percent at 7,442.31

Euro/dollar: UP at $1.0633 from $1.0620 late Thursday

Euro/pound: UP at 85.13 pence from 84.98 pence

Dollar/yen: DOWN at 133.87 yen from 134.40 yen

Pound/dollar: DOWN at $1.2490 from $1.2495

Brent North Sea crude: DOWN 0.3 percent at $122.72 per barrel

West Texas Intermediate: DOWN 0.3 percent at $121.21 per barrel

New York – Dow: DOWN 1.9 percent at 32,272.79 (close)

With gun control under debate and monkeypox in the headlines, Americans are facing a barrage of new twists on years-old misinformation in their social media feeds.

Accurate news stories about mass shootings have attracted eyeballs but algorithms have also spurred baseless conspiracy theories from trolls who want to push lies to attract traffic. And thousands have unwittingly shared them on Facebook, Twitter and other sites.

The May 24 attack at Robb Elementary School in Uvalde, Texas was a “false flag” operation aimed at pushing restrictive gun laws, according to Telegram posts from supporters of QAnon. 

Carl Paladino, a New York congressional candidate, was among those who shared a similar theory on Facebook, later deleting it.

Others misidentified a shooting victim as “Bernie Gores” — a made-up name paired with an image of a YouTuber who has been wrongly linked to other major news events, including the Russian invasion of Ukraine.

Experts say such misinformation is part of a pattern in which unscrupulous operators intentionally repurpose old narratives.

“A lot of this stuff is put together almost in this factory production style,” said Mike Caulfield, a misinformation researcher at the University of Washington’s Center for an Informed Public. 

“You have a shooting event, you have these various tropes you can apply.”

Groundless claims of a “false flag” operation, which refers to political or military action that is carried out with the intention of blaming an opponent, can be traced back to the 2012 mass shooting at Sandy Hook Elementary School in Newtown, Connecticut.

After 20 children and six staff members were killed, InfoWars founder Alex Jones falsely claimed the Newtown casualties were “crisis actors” — people who are paid or volunteer to play disaster victims. 

In November 2021, a Connecticut judge found Jones liable for damages in a defamation suit brought by parents of the victims.

But regardless, allegations of staged mass shootings have routinely spread from fringe online networks such as 4chan to mainstream platforms — including the social media feeds of politicians such as Republican congresswoman Marjorie Taylor Greene and, more recently, Arizona state senator Wendy Rogers. 

Hoax posts misidentifying gunmen or victims as internet personalities have also become common.

In the race to capture online attention following breaking news, recycled narratives can be produced quickly and are easier for audiences to digest, Caulfield said. Content producers “make guesses” about what may go viral based on past popular tropes, which can help monetize that attention.

“When you spread this stuff, you want to be seen as in the know,” he said, even though the information is demonstrably false or misleading.

– Copying the Covid-19 playbook –

Similarly, false claims about the recent spread of monkeypox — a rare disease related to smallpox — borrow from Covid-19 misinformation.

Since the outbreak, social media posts have claimed without evidence that the virus is a bioweapon, that the outbreak was planned, and that Microsoft co-founder Bill Gates is behind it. Others have falsely equated monkeypox to other viruses, including shingles.

Those claims resemble debunked conspiracy theories from the early days of the Covid-19 pandemic.

Memetica, a firm that conducts digital investigations, has researched some of the top Covid-19 misinformation recycled for monkeypox. One widespread theory points to a 2021 threat preparation exercise conducted by the Nuclear Threat Initiative (NTI) as purported evidence that the outbreak was planned.

That conspiracy theory is nearly identical to claims about Event 201, a pandemic simulation held in October 2019, that circulated online in early 2020.

“What was surprising to me was how similar (Covid-19 misinformation) is now to monkeypox,” Adi Cohen, chief operating officer at Memetica, told AFP. 

“It’s the same exact story — oh, this is all planned, it’s a ‘plandemic,’ here’s the proof.”

Some monkeypox theories have been shared by conservative figures including Glenn Beck and anti-vaccine advocate Robert F. Kennedy Jr, according to Memetica’s research. Both have previously promoted misinformation about Covid-19.

Cohen said such tactics may be an effective way to get engagement on social media, regardless of the falsity of the information being shared.

“It’s the replication of what seems to work in the past,” he said. “Why work hard when you don’t have to?”