Global markets turn bearish on recession fears

Global stock markets on Thursday shrugged off an initial positive sentiments from the US Federal Reserve’s large interest rate hike the day before aimed at countering runaway inflation without triggering a recession.

Markets initially welcomed the Fed move, the first 75-basis point rate hike since November 1994 as investors took heart from the Fed chairman Jerome Powell’s comments suggesting future rate increases may be more modest, but later Wall Street and other markets reversed the trend as the economists warned the gains might be short-lived given the extent that high inflation has seeped into the world economy.

The US equities tumbled with the broad-based S&P 500 lost nearly three per cent to 3,689.43 points about an hour into the trading session. The Dow Jones Industrial Average dropped 2.3 per cent to 29,950.40, while the tech-rich Nasdaq Composite Index fell 3.6 per cent to 10,701.92.

European, Asian markets fall

European benchmarks and most Asian markets, including the Gulf stocks, also fell in line with the US equities.

“GCC stock markets moved negatively in reaction to the US Federal Reserve’s decision to raise interest rates on Wednesday. The larger hike could impact economic growth more sharply and could change investors’ approach toward risk,” Farah Mourad, senior market analyst of XTB Mena, told Khaleej Times.

The Saudi benchmark Tadawul All Share Index, shed 1.29 per cent or 154.09 points, at 11,824.42 points. The UAE markets also turned bearish and closed into negative columns as investors reacted to the US central bank’s decision. The Dubai Financial Markets and the Abu Dhabi stock market ended 1.66 per cent and 0.99 per cent lower, respectively.

The Qatari stock market saw its main index slide as well following broader global negative performances. The market was also impacted by the fall in natural gas prices.

“The Dubai stock market declined as investors reacted to the US central bank’s decision. The market could see some price corrections as investors reassess their risk appetite,” Mourad said.

— muzaffarrizvi@khaleejtimes.com