Global stock markets end mixed as investors focus on likely Fed rate hike next week

Policymakers are expected to raise rates by 50 basis points on Wednesday at their last meeting for 2022, after four consecutive increases of 75 basis points

Markets are concerned that the report on the US consumer price index, which is due next week, may indicate that inflation has not gone down enough to convince the Fed to cut rates sooner. Getty Images
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Global stock markets ended the week on a mixed note, with Wall Street falling amid persistent inflation and speculation days ahead of another expected interest rate hike from the US Federal Reserve.

The US producer price index gained 0.3 per cent last month, capping a 7.4 per cent increase in the past 12 months through the end of November, and showed that inflation in the world's biggest economy, while still high, was slowing down.

However, markets are also concerned that the report on the US consumer price index, which is due next week, may indicate that inflation has not gone down enough to convince the Fed to cut rates sooner.

Fed policymakers are seen to hike rates by 50 basis points on Wednesday at their last meeting for 2022, after four consecutive increases of 75 basis points.

"Traders have been optimistic about the US inflation data since the release of the previous CPI reading, and another reading of CPI data will be released which will really make or break the Santa rally," said Naeem Aslam, chief market analyst at Avatrade, referring to an increase in the stock market leading up to December 25.

The S&P 500 and tech-heavy Nasdaq Composite each fell about 0.7 per cent, while the Dow Jones Industrial Average shed 0.9 per cent. The S&P 500 was particularly weighed down by energy stocks, which declined 2.3 per cent.

For the week, the indices lost 3.4 per cent, 4 per cent and 2.8 per cent, respectively.

In Europe, major stock markets were able to eke out gains ahead of another round of expected interest rate increases from the European Central Bank and the Bank of England next week.

London's FTSE 100 settled almost flat on Friday, while Frankfurt's DAX rose 0.7 per cent and the CAC 40 in Paris gained 0.5 per cent.

Earlier in Asia, stock markets reacted positively to China's easing of Covid-19 regulations, which have pummelled activity in the world's second-largest economy and even triggered widespread protests among residents.

Beijing this week announced that it was easing nationwide Covid-19 rules, the first set of widespread reforms to its zero-Covid policy since rare protests erupted late last month.

Proof of a negative PCR test will no longer be required for entry to public places, with the exception of schools, nurseries and care centres for the elderly, the National Health Commission announced on Wednesday.

Hong Kong's Hang Seng led gains, settling 2.3 per cent higher. Tokyo's Nikkei 225 rose 1.2 per cent, while the Shanghai Composite inched up 0.3 per cent.

In commodities, oil prices posted their worst weekly decline in months on mounting recession concerns.

Brent settled 0.07 per cent lower at $76.10 at the close of trading on Friday, whiel West Texas Intermediate closed 0.62 per cent lower at $71.02 a barrel.

Gold, meanwhile, gained as traders anticipate next week's US inflation data and the Fed's decision on interest rates.

US gold futures gained $9.20, or 0.5 per cent, to close at $1,810.70 an ounce.

The precious metal, which is used by investors as a hedge against inflation, is seen to post a stable performance in 2023 despite a mixed set of challenges, the World Gold Council said in its outlook released this week.

Updated: December 10, 2022, 7:42 AM