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BANGKOK — World shares skidded Tuesday following a slump on Wall Street after after a report showed American shoppers spent more at retailers last month than expected.
A strong U.S. economy might keep inflation from falling to a level where the Federal Reserve feels comfortable cutting interest rates. High interest rates and bond yields hurt prices for all kinds of investments.
U.S. futures edged 0.1% lower early Tuesday.
In Europe, Germany’s DAX lost 1.4% to 17,767.98 while the CAC 40 in Paris declined 1.2% to 7,945.68. In London, the FTSE 100 was down 1.5% at 7,848.89.
The Chinese government reported that the economy, the world’s second largest after the U.S., grew at a surprisingly fast 5.3% annual rate in the first quarter of the year. In quarterly terms it expanded at a 1.6% pace.
But while manufacturing and consumer spending were robust in January and February, helped by the Lunar New Year holidays, indicators are less rosy for March. House prices continued to fall and consumer spending slowed, while industrial output also weakened.
“The sky is not blue in China,” Ipek Ozkardeskaya of Swissquote said in a commentary, since such signals hint “that the underlying problems are not going away.”
The Shanghai Composite index lost 1.7% to 3,007.07, while the Hang Seng in Hong Kong lost 2.1% to 16,248.97.
Tokyo’s Nikkei 225 fell 1.9% to 38,471.20 as the dollar continued to gain against the Japanese yen, hitting fresh 34-year highs. By late afternoon the dollar was trading at 154.51 yen, up from 154.27 yen.
The euro was unchanged at $1.0626.
Elsewhere in Asia, Taiwan’s Taiex led the regional decline, falling 2.7%. Markets in Bangkok were closed for Songkran holidays.
In South Korea, the Kospi declined 2.3% to 2,609.63, while Australia’s S&P/ASX 200 fell 1.8% to 7,612.50.
On Monday, the S&P 500 tumbled 1.2%, following up on its 1.6% loss from last week — its worst since October. The Dow Jones Industrial Average dropped 0.7% and the Nasdaq composite slumped 1.8%.
The economy and financial markets are in an awkward phase where stronger spending and growth raises hopes for better corporate profitability but also hurts prospects for easier interest rates from the Federal Reserve.
High interest rates and bond yields hurt prices for all kinds of investments, particularly those that look expensive or those that compete for the same kinds of investors as bonds do.
In the oil market, a barrel of U.S. crude for May delivery slipped 41 cents to $85.00 per barrel in electronic trading on the New York Mercantile Exchange. It fell 25 cents to $85.41 on Monday as political leaders urged Israel not to retaliate after Iran’s attack on Saturday involving hundreds of drones, ballistic missiles and cruise missiles.
Brent crude, the international standard, shed 34 cents to $89.76 per barrel. It eased 35 cents to $90.10 per barrel on Monday.
This year’s jump in oil prices has been raising worries about a knock-on effect on inflation, which has remained stubbornly high. After cooling solidly last year, inflation has consistently come in above forecasts in each month so far of 2024.
