Global stocks fall as US-China tensions mount while the dollar steadies after Fed-driven rally
- Global stocks declined Wednesday as tensions heat up between US and China over Taiwan.
- The dollar eased after a steep rally the day before when investors snapped up safe-havens.
Global stocks fell on Wednesday, as US-China tensions mounted, while the dollar steadied after rallying in the previous session following hawkish rhetoric from Federal Reserve officials.
The MSCI World Index of global shares fell 0.1% while US futures rose across the board. S&P 500, Dow Jones and Nasdaq 100 futures gained 0.31% and 0.36% and 0.23%, respectively.
Asian markets were mixed, with China's CSI 300 index falling almost 1%, while Taiwan's benchmark stock index gained 0.20%.
Elsewhere in Europe, stocks climbed across the board even as energy concerns escalate. Frankfurt's DAX and Paris' CAC rose 0.28% and 0.27% respectively.
Pressure is building between US and China after US House Speaker Nancy Pelosi visited Taiwan on Tuesday as part of a tour of Asia. China, which claims Taiwan is part of its territory, however, retaliated with verbal aggression over the visit, saying it would "not sit idly by" if such a senior ranking US politician visits the island.
'This issue will linger far longer than market's attention spans will allow. Yet geostrategists are largely united in the view that we are still worryingly close to a potential Fourth Taiwan Strait Crisis," analysts at Rabobank said.
Meanwhile, the dollar eased after rising nearly 1% the day prior after Fed officials signaled more work needed to be done to cool down fast price growth, with San Francisco regional Fed President Mary Daly saying the Fed's work was "nowhere near" done on fighting inflation.
The yield on the key US 10-year Treasury note, which moves inversely to the price, rose as investors digested no end to an aggressive monetary policy.
In oil markets, benchmark Brent crude tumbled 0.97% to trade at $99.58 a barrel, while WTI crude lost 1.18% ahead of The Organization of the Petroleum Exporting Countries (OPEC) meeting Wednesday in which supply increases are expected to remain largely unchanged, with no additional output.
"With the group having under-impressed on the production roadmap for now, any increases in targets may remain underwhelming. A decision not to raise production would also disappoint, especially after President Joe Biden visited Saudi Arabia this month hoping to strike a deal on oil production," Saxo Bank said.