Global Stock Markets Fell Last Week, Inflation Remains Elevated

Last week, stock prices on global markets fell as inflation is not easing as quickly as investors had hoped, suggesting that market estimates regarding the pace of central bank interest rate cuts may have been overly optimistic.

On Wall Street, the Dow Jones fell 0.9 percent to 38,686 points, while the S&P 500 slipped 0.5 percent to 5,277 points, and the Nasdaq index dropped 1.1 percent to 16,735 points.

The movement of the indices recently has primarily depended on fluctuations in the technology sector and macroeconomic data.

The technology sector has been leading in growth for a long time, but the question arises as to how sustainable this growth, fueled by excitement over artificial intelligence development, really is.

Therefore, recently, stock prices in the technology and communication sectors have been quite volatile.

Additionally, the market moves depending on macroeconomic data, primarily those indicating inflation trends.

Stock prices have been rising for months due to speculation that the U.S. central bank would aggressively cut interest rates this year, which would support economic growth.

However, these speculations have faded as all recent macroeconomic data show that inflationary pressures in the U.S. remain elevated, and the labor market remains strong.

As a result, Fed leaders have been reiterating for some time that interest rates may remain elevated for a longer period than expected.

Nonetheless, the market still hopes for a more optimistic scenario, according to which the Fed would cut rates twice by the end of the year, starting in September.

Despite the poor performance of the indices on Wall Street this week, stock prices rose significantly throughout May.

The Nasdaq index jumped nearly 7 percent, the S&P 500 around 4.8 percent, and the Dow Jones 2.4 percent. During May, all three indices reached record levels.

European stock prices also fell last week. The London FTSE index weakened by 0.5 percent to 8,275 points, while the Frankfurt DAX slipped 1.05 percent to 18,497 points, and the Paris CAC fell 1.3 percent to 7,992 points.

Despite this, the indices recorded growth in May. The STOXX 600 index of leading European stocks gained 2.3 percent in the past month.

Market support was provided by estimates that the European Central Bank would begin lowering interest rates as early as June.

The ECB is likely to do so next week, but the latest data showed that inflation in the Eurozone rose from 2.4 to 2.6 percent in May, meaning that a more aggressive pace of ECB rate cuts cannot be expected until the end of the year.