LONDON May 31 — European shares opened weaker today and Wall Street was tipped for a fall, as surging oil prices fanned fears of further acceleration in global inflation, forcing the US Federal Reserve and other central banks to keep raising interest rates.
With US inflation running more than three times the 2 per cent goal, Fed Governor Christopher Waller yesterday advocated 50 basis-point rate rises until there was a “substantial” reduction in inflation. He said stock markets were not out of the woods despite a rebound from mid-month troughs. That rebound was spurred by perceptions that inflation may have peaked and a pullback in Fed rate hike expectations.
Ten-year Treasury yields, shut yesterday for a US holiday, jumped as much as 10 bps before easing to trade 6 bps higher at 2.81 per cent. While still 40 bps below their early-May highs, yields have inched off six-week lows hit recently.MSCI’s global stock index is set to end May with a small loss, its first monthly fall this year, while a pan-European index slipped 0.4 per cent today.
That allowed Chinese blue chip shares to rise 1.6 per cent while MSCI’s index of Asian shares outside Japan was up 0.7 per cent.