On Thursday, global stock indexes were trading lower and Treasury yields also recorded a decline after data for May on the global economy showed that there was a less than expected increase in consumer spending. Meanwhile, price pressures continued to remain strong, which means the US Federal Reserve is not going to leave its aggressive monetary policy tightening path.
Wall Street’s benchmark S&P 500 index was on course to record its worst first half of the year, which has not happened since 1970. Likewise, the MSCI’s index of global shares was also set to record its worst first six months of the year.
On Thursday, a report from the Commerce Department showed that there was a less-than-expected increase in consumer spending in the US last month and also suggested that inflation had probably hit its peak. Therefore, the higher prices had forced people to cut back on some purchases. Worries of a recession have been fueled by tightening financial conditions and increasing interest rates.
Market analysts said that they did not need to worry about inflation anymore because it was apparent that it is not going to go anywhere anytime soon.
Central banks committed
The chiefs of global central banks, including that of the US Federal Reserve, the Bank of England (BoE), and the European Central Bank (ECB) had a meeting this week in Portugal. All of them renewed their commitment to combat inflation, regardless of the pain, it will cause.
There was a 0.8% fall in the Dow Jones Industrial Average, as it declined by 247.64 points to reach 30,781.67. A fall of 0.69% was recorded in the S&P 500, which reduced by 26.34 points to close at 3,792.49. Meanwhile, a decline of 0.92% was reported in the Nasdaq 100, which was close to 103.29 points and brought it to 11,074.60.
Since the beginning of the year, the S&P 500 has declined by more than 20%, which has made it the index’s worst-performing year since 1970. The continent-wide STOXX 600 index also declined by 1.50%, while a 0.95% fall was seen in the MSCI’s gauge of global stocks.
Impact on other markets
The hawkishness of the US Federal Reserve and the demand for liquidity amongst investors in these tough times have given the US dollar a boost. There was a decline of 0.238% in the US dollar index, while a 0.27% gain was recorded in the euro, which climbed to $1.0467.
There was also a decline in oil prices, as OPEC+ made the announcement that they would give the output a boost exactly as much as it had been announced previously. There was also a 2.79% decline in US crude, which brought it down to $106.72 a barrel, and Brent crude had declined 0.95% to trade at $115.16 per barrel for the day. A 0.3% decline in spot gold was also recorded, which brought it to $1,812.43 per ounce. In the cryptocurrency market, Bitcoin was once more struggling to hold onto the $20,000 threshold and had dropped to $19,000.