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Stocks in Europe and Asia fell on Thursday as investors worried about the prospect of slower global growth and higher U.S. interest rates.
Europe’s Stoxx 600 opened 0.5 percent lower after six days of losses, France’s Cac 40 fell 0.3 percent and Germany’s Dax fell 0.3 percent.
The pessimism spread from China after official data showed trade in the world’s second-largest economy was weakening.
While less bleak than analysts had predicted, China’s trade data on Thursday showed exports fell 8.8% year-on-year in August and imports fell 7.3%, suggesting slowing demand at home and abroad. The benchmark CSI 300 and Hong Kong’s Hang Seng both fell 1.4%.
“A period of sticky inflation has depressed real wages in Western economies, while rising interest rates have reduced purchasing power in Western economies through higher debt service costs,” said Kaiwen Lin, senior China economist at Pantheon Macroeconomics.
“Combined with the easing of the post-epidemic consumption boom, this has led to weak demand for discretionary items in China,” he noted.
While economic growth in the rest of the world slowed, U.S. data earlier this week showed rising price pressures, fueling investor doubts that the Federal Reserve will start cutting interest rates.
Consumers continued to spend even as the federal funds rate climbed to a 22-year high over the past year, with the U.S. services sector unexpectedly expanding in August.
The data reinforced the belief that “even if the Fed finishes raising rates, if the economy continues to be so strong, it may need to hold key rates on hold for longer than previously expected,” said Karl Steiner, chief quantitative strategist at SEB Research Center.
The dollar, which tends to rise when investors expect higher interest rates, was up 0.1% against a basket of six currencies on Thursday, still near its strongest level since March.
While most market participants believe the Fed will keep rates steady at its meeting this month, some are betting on another rate hike later this year.
Contracts tracking Wall Street’s benchmark S&P 500 fell 0.3%, while those tracking the tech-heavy Nasdaq 100 fell 0.5% ahead of the New York open, as traders braced for a slew of Fed policy later in the day. Formulators prepare for speeches at meetings. .
Oil prices steadied as concerns over slowing demand in China, the world’s largest importer of fossil fuels, outweighed earlier supply cuts announced by Riyadh and Moscow.
Brent crude fell 0.3% to $90.37 a barrel, still near its highest level this year, while U.S. West Texas Intermediate fell 0.4% to $87.16 a barrel.
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