Global Markets: Wall Street stock indices fall, European exchanges follow suit

On Wall Street, stock prices fell about 1 percent on Monday as investors are concerned about the situation in the Middle East and rising oil prices, while hopes for a sharp reduction in interest rates by the U.S. central bank have also faded.

The Dow Jones fell 0.94 percent to 41,954 points, while the S&P 500 slid 0.96 percent to 5,695 points, and the Nasdaq index dropped 1.18 percent to 17,923 points. Thus, the Dow Jones and S&P 500 slipped from record levels, which is partly due to reduced expectations that the Fed will continue with aggressive rate cuts after it reduced them by 0.50 percentage points in September.

Data released on Friday showed that the situation in the U.S. labor market is better than expected, so the Fed does not need to rush to stimulate economic growth. Additionally, due to the escalation of the conflict in the Middle East between Israel and Iran, oil prices have been rising sharply for days, which could trigger increased inflation.

As a result, the market estimates that the chances of the Fed cutting interest rates by another 0.50 percentage points in November have fallen to just about 15 percent. It is much more likely that rates will be reduced by 0.25 percentage points.

This week, investors will focus on new inflation data in the U.S., as well as the business results of companies and banks, as the quarterly financial reporting season begins at the end of the week.

European exchanges follow Wall Street’s decline

On European exchanges, stock prices significantly fell on Tuesday morning, just like on Wall Street the day before, as expectations that the U.S. Fed would continue with aggressive rate cuts have faded. The STOXX 600 index of leading European stocks was down 0.8 percent at 9:30 AM. Meanwhile, the London FTSE index slid 1.01 percent to 8,219 points, while the Frankfurt DAX fell 0.84 percent to 18,940 points, and the Paris CAC dropped 1.21 percent to 7,485 points. Investors were shaken by yesterday’s decline on Wall Street, when the Dow Jones and S&P 500 indices fell nearly 1 percent, and the Nasdaq more than 1 percent.

In most Asian markets, stock prices also fell. The MSCI Asia-Pacific index, excluding Japan, was down about 1 percent at 9:30 AM.

Decline in Asia

The Japanese Nikkei index fell 1 percent, while stock prices in Australia, South Korea, and Hong Kong dropped between 0.2 and 7.7 percent. In Shanghai, however, they jumped 4.5 percent.

At the very start of trading in Shanghai, stock indices surged more than 10 percent to their highest levels in several years, but later gains faded.

Thus, on the first working day after several days of holidays, the strong rise in stock prices continued, which was recently spurred by Chinese authorities introducing new monetary and fiscal incentives, the largest since the pandemic, to accelerate economic growth and curb the real estate market crisis.

In Hong Kong, the Hang Seng index plummeted more than 10 percent at the start of today’s trading, but later losses were reduced.

This is a result of profit-taking from the market after stock prices surged significantly last week.