Just in:
MENA Investment Banking Fees Slip Amid Equity Underwriting Lull // DNA‑Crafted Nanomachines Self‑Assemble in Water // BRICS Pledge Cooperation, Not Confrontation With U.S. // Entrepreneurs Turn to Harsh AI ‘Red Teamers’ to Stress‑Test Ideas // Baku ID 2025 Concludes: Baku Becomes the Regional Hub for Innovation // Musk Alleges Grok Was Misled and Predicts Tech Breakthroughs // IIT Delhi and TeamLease EdTech Kick‑start AI for Healthcare Executive Programme // Moroccan‐Born Duo Secures $4.2 Million to Sharpen AI Search Precision // UAE Championing Balanced Oil Markets Through OPEC+ Engagement // Nigeria’s Coastal Highway Passes $747 m Funding Milestone // Behomes Launches Behomes Hub – Cashback & Networking App for Real Estate Professionals // UAE Tightens Entry Rules for Nigerian Travellers // MCP Ignites AI Agent Revolution Amid Looming Security Quagmire // Caltex Commemorates SG60 with Launch of Limited Edition National Day Picnic Sets // Aramco Eyes New U.S. LNG Offtake in Cameron Deal // Tokyo Real Estate Set for $75 Million Blockchain Shake‑Up // CGTN: Beauty in diversity: How wisdom at Nishan Forum inspires global modernization // Uweb, the Digital Asset Education Institute, Announces Successful Completion of a US$3 million Angel Funding Round // TÜV SÜD Appoints Interim Leadership Following CEO Transition // Qingzhen’s Zhanjie Town Leverages Ecological Resources to Drive Industrial Upgrading and Integrate Culture and Tourism for Rural Revitalization //

Global Sell-Off as Investors Fear Persistant Inflation and Higher Rates

Financial markets across the globe experienced a significant decline on Thursday, as anxieties over persistently high inflation and the possibility of continued interest rate hikes by central banks dampened investor sentiment.

The decline began in Asia, where major stock indexes plunged. The MSCI broadest index of Asia-Pacific shares outside Japan fell by 1. 2%, extending losses from the previous session. Japan’s Nikkei index also mirrored the downtrend, slipping 1. 3%. This negative sentiment followed Wall Street’s lead, with U. S. stock futures pointing towards a lower opening. European markets were expected to follow suit, with EUROSTOXX 50 futures and S&P 500 futures indicating a decline.

The primary driver of the sell-off was investor concern over inflation. Recent economic data has suggested that inflation may not be cooling down as quickly as anticipated. This has led investors to believe that central banks, like the Federal Reserve in the United States, will need to maintain interest rates at higher levels for a longer period to combat inflation. Higher interest rates typically lead to lower stock prices, as they increase the cost of borrowing for companies and reduce the potential future returns for investors.

ADVERTISEMENT

The bond market also felt the tremors of the sell-off. Bond prices and yields have an inverse relationship. When investor anxiety rises, they tend to flock to bonds, which are seen as safer investments. This increased demand for bonds pushes prices up and yields down. However, on Thursday, bond prices fell as investors priced in the possibility of a prolonged period of higher interest rates. This drove bond yields upwards.

The recent market gyrations highlight the delicate balancing act that central banks face. They are tasked with controlling inflation while also supporting economic growth. If they raise interest rates too aggressively, they risk triggering a recession. Conversely, if they don’t raise rates enough, inflation could spiral out of control.

The upcoming release of key inflation data later this week will be closely watched by investors for further clues about the future trajectory of interest rates and the overall health of the global economy.

Read the full story on 1arabia.com


Notice an issue?

Arabian Post strives to deliver the most accurate and reliable information to its readers. If you believe you have identified an error or inconsistency in this article, please don't hesitate to contact our editorial team at editor[at]thearabianpost[dot]com. We are committed to promptly addressing any concerns and ensuring the highest level of journalistic integrity.


ADVERTISEMENT