Global shares sink after US Fed notes dent hopes of rate hikes ending

Global stocks followed Wall Street lower Thursday after notes from a US Federal Reserve meeting dented hopes interest rate hikes are finished.

London, Hong Kong, Paris and Seoul declined. Shanghai and Wall Street futures advanced. Oil prices rose.

Wall Street's benchmark S&P 500 lost 0.8% on Wednesday after minutes from the Fed's latest meeting suggested board members are unsure what to do after raising their key lending rate to a two-decade high. Traders had hoped the board would decide inflation was under control and last month's rate hike was the last.

Fed officials face a tough balancing act between the risk of an inadvertent over-tightening of policy against the cost of an insufficient one, said Tan Boon Heng of Mizuho Bank in a report.

In early trading, the FTSE 100 in London fell 0.3% to 7,332.01. The CAC 40 in Paris lost 0.4% to 7,233.00 and the DAX in Frankfurt retreated 0.3% to 15,738.25.

On Wall Street, futures for the S&P 500 and the Dow Jones Industrial Average were 0.1% higher.

On Wednesday, the Dow lost 0.5% and the Nasdaq composite dropped 1.1%.

In Asia, the Shanghai Composite Index gained 0.4% to 3,163.73, recovering from a loss in morning trading. The Nikkei 225 in Tokyo retreated 0.4% to 31,626.00 and the Hang Seng in Hong Kong was off less than 0.1% at 18,308.06.

The Kospi in Seoul shed 0.2% to 2,519.85 and Sydney's S&P-ASX 200 declined 0.7% to 7,146.00.

India's Sensex lost 0.6% to 65,139.93. Bangkok gained while New Zealand and other Southeast Asian markets retreated.

On Wall Street, the bond market is drawing money out of stocks as rising interest rates increase the yield, or the difference between the market price and the payout at maturity.

Yields widened further after the release of Fed notes increased expectations of another possible rate hike. When safer bonds pay higher returns, investors often feel less incentive to buy stocks, which have more volatile prices.

At a news conference, Fed Chair Jerome Powell said Wednesday the Fed staff no longer projects a recession this year but sees an economic slowdown with risks to growth tilted to the downside and risks to inflation tilted to the upside.

Investor hopes have been supported by unexpectedly strong US hiring and consumer spending.

Critics have warned Wall Street was too quick to embrace the hope inflation was under control and rate hikes to cool economic activity could end.

Wall Street has retrenched this month on such concerns and expectations interest rates might stay high for longer than expected.

On Wednesday, big technology stocks and other investments seen as particularly vulnerable to higher rates were some of the biggest decliners. Tesla fell 3.2%. Facebook's parent, Meta Platforms, dropped 2.5%, and Amazon fell 1.9%.

An unexpectedly strong report on US retailer sales helped trigger the slide by suggesting there still is upward pressure on prices.

The yield on the 10-year Treasury rose to 4.26% from 4.22% late Tuesday. It is once again close to where it was when the 2007-09 Great Recession sent interest rates crashing. The 10-year yield helps set rates for mortgages and other important loans.

The 10-year Treasury Inflation Protected Security, which takes inflation into account, is at its highest level since 2009, according to Tradeweb.

Intel's stock fell 3.6% after it and Tower Semiconductor agreed to call off Intel's $5.4 billion buyout of the Israeli chip maker. The deal faced resistance from Chinese regulators.

In energy markets, benchmark US crude rose 30 cents to $79.68 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.61 on Wednesday to $79.38. Brent crude, the price basis for international oils, advanced 34 cents to $83.79. It retreated $1.44 the previous session to $83.45 a barrel.

The dollar declined to 146.13 yen from Wednesday's 146.24 yen. The euro gained to $1.0877 from $1.0868.