Stocks fall on new interest rate hike, Middle East worries

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Stocks fell Thursday as investors anticipated another round of interest rate hikes which the Bangko Sentral ng Pilipinas announced after the trading hours.

Meanwhile, most Asian stocks also sank Thursday, tracking a retreat on Wall Street fueled by a surge in US Treasuries and worries over a possible escalation of the Middle East crisis, which also pushed oil prices higher. The spike sent 10-year treasury yields — seen as a proxy for future interest rates — surging back towards five percent, and putting pressure on the Federal Reserve as it tries to battle inflation while attempting to avoid tipping the economy into recession.

“This is where the rubber meets the road. A recession would result in higher unemployment, less consumer spending, slower gross domestic product growth and lower earnings, which implies lower stock prices.” Hong Kong was also back in negative territory as Wednesday’s rally — fueled by China’s move to pump more than $100 billion into infrastructure spending — petered out. Still, Shanghai edged up.

 

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