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Global Stocks Mixed After Wall Street Sinks on Rate Fears

Global Stocks Mixed After Wall Street Sinks on Rate Fears

BEIJING—Global stock markets were mixed Tuesday as traders looked ahead to a speech by Federal Reserve Chair Jerome Powell for clues to interest rate plans after Japanese wages rose and Australia’s central bank hiked its key rate again.

London and Shanghai gained. Frankfurt, Tokyo, and Wall Street futures declined. Oil prices rose.

Last week’s unexpectedly strong U.S. data on hiring and wages dampened hopes the Fed might decide it has succeeded in cooling inflation that is at multi-decade highs and can wind down plans for more rate hikes.

During his appearance in Washington, Powell is “likely to repeat that inflation is still too high” and the “policy rate will have to rise,” said Rubeela Farooqi and John Silvia of High-Frequency Economics in a report.

Traders worry the Fed and other central banks might tip the global economy into recession to extinguish inflation. Some are counting on a U.S. rate cut as early as late 2023 despite comments by Fed officials that borrowing costs will have to stay elevated for an extended period.

In early trading, the FTSE 100 in London gained 0.3 percent to 7,863.65. Frankfurt’s DAX fell 0.4 percent to 15,291.90 and the CAC 40 in Paris lost 0.3 percent to 7,115.76.

On Wall Street, futures for the benchmark S&P 500 index and the Dow Jones Industrial Average were off 0.1 percent.

On Tuesday, the S&P 500 fell 0.6 percent and the Dow lost 0.1 percent. The Nasdaq composite tumbled 1 percent.

In Asia, the Nikkei 225 in Tokyo lost less than 0.1 percent to 27,685.47 after the government reported wages rose 4.8 percent over a year earlier in December. That was close to a three-decade high as workers press for higher pay to keep pace with inflation.

The Shanghai Composite Index rose 0.3 percent to 3,248.09 and the Hang Seng in Hong Kong advanced 0.6 percent to 21,298.70. The Kospi in Seoul added 0.6 percent to 2,451.71.

Sydney’s S&P-ASX 200 lost 0.5 percent to 7,504.10 after the Reserve Bank of Australia raised its benchmark rate by 0.25 percentage points to 3.35 percent. The RBA said more hikes are planned to lower inflation that is at a 33-year high of 7.8 percent to its target range of 2 percent to 3 percent.

India’s Sensex fell 0.4 percent to 60,284.40. New Zealand and Singapore declined while Jakarta and Bangkok advanced.

The yield on the two-year Treasury, which tends to track expectations for the Fed, leaped by an unusually wide margin to 4.47 percent from Friday’s 4.29 percent and the previous day’s 4.1 percent.

The yield on the 10-year Treasury, which helps set rates for mortgages and other important loans, jumped to 3.64 percent from 3.52 percent late Friday.

Traders worry the Fed and central banks in Europe and Asia might be willing to tip the global economy into recession to extinguish inflation that is at multi-decade highs.

Friday’s employment data showed the U.S. economy added twice as many jobs as expected last month despite higher interest rates. That is good for workers but the Fed worries wage gains will push up inflation. That fuels fears the U.S. central bank might push rates higher.

In energy markets, benchmark U.S. crude gained $1.65 to $75.76 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 72 cents to $74.11 on Monday. Brent crude, the price basis for international oil trading, advanced $1.62 to $82.61 per barrel in London. It added $1.05 the previous session to $80.99.

The dollar fell to 131.81 yen from Monday’s 132.67 yen. The euro declined to $1.0716 from $1.0728.

By Joe Mcdonald

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