Global shares seesaw after Fed minutes offer no surprises on rates, while natural gas at 2008 highs fans inflation fears
- Global shares seesawed on Thursday after minutes from the Federal Reseve's meeting confirmed big rate hikes are coming.
- The Russian central bank slashed interest rates to 11% to try to curb the ruble's strength against the dollar.
Global stocks flatlined on Thursday, showing some stability after the minutes of the Federal Reserve's most recent meeting confirmed the market's view that bigger rate rises are coming in order to cool down inflationary pressures.
Futures on the S&P 500 and Dow Jones eased in volatile trade, dipping 0.2% and 0.1%, respectively, while those on the Nasdaq 100 fell by 0.5%. US stocks closed higher Wednesday after the minutes showed the central bank will stick to aggressive interest rate hikes in the near term and then gauge the economy's response.
The Federal Open Market Committee's minutes showed US policy makers unanimously agreed they should "expeditiously move the stance of monetary policy toward a neutral posture," to get a handle on inflation. It has already signaled rate hikes of 50 basis points in June and July.
"Markets have already become comfortable with the idea of further 50bps rate rises in June and July, with more rate rises to come, along with discussions about the prospect of moving rates beyond neutral to help constrain above-target inflation. None of this is new, but it's also not particularly instructive given that not one FOMC member has the same measure of where the neutral rate actually is," Michael Hewson, chief strategist at CMC Markets, said.
Stocks have been in retreat for most of this year, as fears over the impact of inflation on the economy have prompted investors to seek safer havens for their cash. Consumer names, such as Target and Walmart have painted a grim picture of the economic outlook in their quarterly earnings.
But not all retailers have been downbeat. On Wednesday, luxury apparel retailer Nordstrom raised its outlook and reported upbeat results, pushing its shares up 14%
Meanwhile, Russia slashed interest rates on Thursday, from 11% to 14%, in an attempt to rein in the ruble, as its strength only stands to worsen the sanctions-hit economy even more.
The dollar was steady around one-month lows, while yields on the 10-year benchmark Treasury note eased 2 basis points to 2.722%, after Fed policy makers stressed there may be a degree of flexibility to the tightening of its monetary policy.
On the energy markets, US natural gas futures dipped on Thursday, after having surged above $9 per million British thermal units earlier in the day, their highest since 2008, as shrinking inventories squeezed prices. In addition to gasoline prices soaring, this is adding to inflationary pressures rippling across the US.
The MSCI All-World index was up 0.1%, building on the gains of the previous days, while in Asia, Chinese stocks shrugged off weakness across regional equities and rose modestly, after Chinese Premier Li Kequiang said the slowing in the country's economy was worse in some ways than when the pandemic struck in 2020, raising the prospect of further stimulus.
The CSI 300 rose 0.3%, while the Shanghai Composite gained 0.5%. Tokyo's Nikkei 225 and the Hang Seng fell 0.27 and 0.27%, respectively.