NEW YORK/LONDON :The dollar strengthened and global stocks retreated on Wednesday as concerns about economic growth and rising inflation soured sentiment, underscored by a 9 per cent surge in British consumer prices and a greater-than-expected price acceleration in Canada.
Soaring prices and material shortages have already hit homebuilding, the sector of the economy most sensitive to rates. But the U.S. Commerce Department report also showed a record backlog of houses to be constructed, indicating a decline in homebuilding potentially would be marginal. MSCI's gauge of stocks across the globe shed 1.55 per cent, while in Europe, the pan-regional STOXX 600 index lost 0.71 per cent.
"Investor sentiment and confidence remain shaky, and as a result, we are likely to see volatile and choppy markets until we get further clarity on the 3Rs - rates, recession, and risk," said Mark Haefele, chief investment officer at UBS Global Wealth Management. Treasury yields fell. A steep path for rates remained the prevailing market consensus as the benchmark 10-year note yield hit a one-week high of 3.015 per cent after Powell's hawkish comments.
Gold prices were little changed as looming U.S. interest rate hikes and a resurgent dollar dimmed the metal's shine.Oil prices dipped in volatile trade as markets weighed expectations that China will ease COVID-19 restrictions against an unexpected fall in U.S. crude stockpiles as refineries processed more crude.