The latest US inflation data surprised the market with a rise in the headline rate rather than the slight fall expected.
A plunge in major US stock benchmarks in the wake of Tuesday's inflation reading led to a drop in the world's benchmark index.
US inflation rose 8.3% in August, compared with the 8.1% expected by economists, according to the consumer price index report. The Federal Reserve uses the consumer price index to make its decisions.
The hotter-than- expected inflation print makes it more likely that the Fed will have to hike interest rates aggressively to bring prices under control.
"Futures are pricing in another 75 basis point hike from the Fed next week, but they are now pricing in a 100 bps hike, while also viewing the prospect of a fourth consecutive 75 bps move in November as an increasingly likely outcome."
In Asian stock markets, Hong Kong's Hang Seng index plunged, Tokyo's Nikkei fell, and the Chinese stock market lost ground.
The pan-continental stock index was down. The CAC 40 in Paris and the DAX 40 in Germany both fell. UK inflation easing, but still near a 40-year high, led to a fall in the London stock market.
The Chinese currency fell after it was reported that the Biden administration is in early discussions of possible sanctions against Beijing.
According to a report, the US is considering sanctions against China to deter an invasion of Taiwan.
The Chinese currency was close to hitting a two-year low. The US dollar fell against other global currencies.
The International Energy Agency said Wednesday that growth in global oil demand would stop in the last quarter of the year. Concerns that more Fed rate hikes will lead to a recession caused futures to fall.
West Texas Intermediate crude was up marginally at $87.36 a barrel.
All Rights Reserved © 2024
