WASHINGTON, July 15 ― Global equity markets edged lower yesterday and oil slipped while the safe-haven dollar rose after the latest red-hot US inflation reading heightened investor fears about Federal Reserve interest rate hikes and a possible recession.
On Wall Street, stock indexes tumbled yesterday after weaker-than-expected earnings from big US banks JPMorgan Chase & Co and Morgan Stanley underscored growing fears of a sharp economic downturn. “In the past hiking cycle, we have observed that inflation kept rising during the hiking cycle. ... It takes time for the monetary policy to affect inflation.” Cheng said that riskier assets will be the “collateral damage” in the Fed's attempts to reign in inflation.
Slowdown worries were exacerbated as the Labour Department's Producer Price Index report echoed Wednesday's Consumer Price Index data, showing hotter-than-expected inflation in June. The European Commission cut its forecasts for euro zone economic growth for this year and revised upward its estimates for inflation.