Global markets witnessed a downturn on Wednesday amidst concerns over US interest rates, with Asian markets particularly affected. The recent attack on a ship in the Red Sea intensified worries about oil supplies, leading to a surge in oil prices.
Investors are cautious ahead of crucial US inflation data later this week, with many opting to sell off following recent gains in the market. Asian markets, including Hong Kong, Tokyo, and Shanghai, experienced declines, with heavy selling observed in Chinese tech companies.
Despite Shanghai seeing a slight uptick following the International Monetary Fund’s improved forecast for Chinese economic growth, overall market sentiment remained subdued.
The attack in the Red Sea amplified geopolitical tensions, contributing to oil price increases. However, analysts like Warren Patterson from ING Groep believe that until there are actual supply disruptions, the upside potential for oil prices remains limited.
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Meanwhile, concerns about potential rate hikes were fueled by a stronger-than-expected consumer confidence reading in the US, casting doubt on the possibility of Federal Reserve rate cuts. Neel Kashkari of the US Federal Reserve hinted at the likelihood of rate increases if inflation persists above the two percent target.
Wall Street indexes closed mixed amid uncertainties surrounding government bond sales and consumer confidence levels.
Looking ahead, investors are closely monitoring the upcoming OPEC meeting and the release of the personal consumption expenditures index for further insights into market trends and potential policy adjustments.