World shares mostly higher after wobbly yield of gains on Wall Street

The central bank has already raised its benchmark interest rate four times this year, with the last two increases by three-quarters of a percentage point

AP New York
World shares mostly higher after wobbly yield of gains on Wall Street

4 min read Last Updated : Sep 15 2022 | 3:58 PM IST

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World shares were mostly higher on Thursday after a wobbly day of trading yielded modest gains on Wall Street.

Germany's DAX added 0.4 per cent to 13,075.05 while the CAC 40 in Paris edged 0.1 per cent higher to 6.230.03. Britain's FTSE 100 climbed 0.6 per cent to 7,320.71. The futures for the S and P 500 and the Dow industrials were up 0.3 per cent.

A report on inflation at the wholesale level released on Wednesday showed that prices are still rising rapidly, with pressures building underneath the surface, even if overall inflation slowed.

It echoed a report on inflation at the consumer level on Tuesday, which raised expectations for interest-rate hikes and triggered a rout for markets.

Investors worry rate hikes by the Federal Reserve to cool surging prices could go too far in slowing the US economy and send it into a recession.

The Fed is trying to avoid that outcome, but the latest inflation reports suggest that is becoming a more difficult task.

But markets appeared to have settled after Tuesday's sell-off.

In Asia, Tokyo's Nikkei 225 index gained 0.2 per cent to 27,875.91. Japan reported a record trade deficit for the month of August, driven by high costs for imports of energy and other commodities and a weak yen.

But analysts said they expect a rebalancing in coming months.

Motor vehicle production should continue to normalize as supply chain disruptions ease, while commodity price growth has eased even further, Darren Tay of Capital Economics said in a commentary.

The Shanghai Composite index lost 1.2 per cent to 3,199.92, while Hong Kong's Hang Seng index rose 0.4 per cent to 18,930.38.

China's central bank left its benchmark lending rate unchanged. While other major economies are raising rates to cool inflation, the world's second-largest economy has been slowing and price increases have been moderate.

The Kospi in Seoul shed 0.4 per cent to 2,401.83, while Australia's S and P/ASX 200 added 0.2 per cent to 6,842.90.

On Wednesday, the S and P 500 added 0.3 per cent, while the Dow Jones Industrial Average inched 0.1per cent higher.

The Nasdaq gained 0.7per cent and the Russell 2000 picked up 0.4 per cent.

Traders now see a one-in-four chance the Fed may hike its benchmark rate by a full percentage point next week, quadruple the usual move, according to the CME Group.

The central bank has already raised its benchmark interest rate four times this year, with the last two increases by three-quarters of a percentage point.

The aggressive action on interest rates is designed to try to cool the hottest inflation in four decades.

Tuesday's report on high prices jolted markets with signs that inflation is entering a more stubborn phase that could require an already resolute Fed to do more.

The broader US economy has been slowing, but consumers have remained resilient and the job market remains strong.

Wall Street will get another update on inflation's latest impact on spending when the government releases its retail sales report for August on Thursday.

In the US, businesses and government officials are bracing for the possibility of a nationwide rail strike at the end of this week that could paralyse an already discombobulated supply chain.

The railroads have already started to curtail shipments of hazardous materials and have announced plans to stop hauling refrigerated products ahead of Friday's strike deadline.

Businesses that rely on Norfolk Southern, Union Pacific, BNSF, CSX, Kansas City Southern and other railroads to deliver their raw materials and finished products were planning for the worst.

Biden administration officials are scrambling to develop a plan to keep goods moving if the railroads shut down.

The White House is also pressuring the two sides to settle their differences, and a growing number of business groups are lobbying Congress to be prepared to intervene and block a strike if they can't reach an agreement.

In other trading Thursday, US benchmark crude oil gained 54 cents to USD 89.02 per barrel in electronic trading on the New York Mercantile Exchange. It jumped USD 1.17 on Wednesday to USD 88.48 per barrel.

Brent crude, the pricing basis for international trading, picked up 50 cents to USD 94.60 per barrel.

The dollar rose to 143.56 Japanese yen from 143.16 yen late on Wednesday. The euro was trading at 99.81 cents, up from 99.77 cents.

Topics :Wall StreetsWorld sharesUS stocks

First Published: Sep 15 2022 | 3:58 PM IST

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