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Global stocks sink after data fan rate hike fears

According to reports London and Frankfurt opened lower. Shanghai, Hong Kong and Sydney also fell. The oil prices rose.

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Annesha Barua
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Global stocks sink after data fan rate hike fears
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Beijing, February 6: On Monday, the Global stock markets and Wall Street futures sank after strong United States jobs data fanned fears of more interest rate hikes to cool inflation. According to reports London and Frankfurt opened lower. Shanghai, Hong Kong and Sydney also fell. The oil prices rose and Tokyo gained. 

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The official data showed o Friday that the US employers who were hired twice as people in January as the previous month and wages rose. It was a good and positive news for workers but dampened hopes the Federal Reserve might decide no more rate increases are needed to slow economic activity.



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Tan Boon Heng of Mizuho Bank said, “The numbers look set to inevitably burst the bubble on Fed pivot bets" because they suggest a re-acceleration in wage pressures." 

During the early trading the FTSE 100 in London lost 0.6 per cent to 7,853.34. The DAX in Frankfurt shed 0.8 per cent to 15,359.20 and the CAC 40 in Paris tumbled 0.9 per cent to 7,171.77. On Wall Street, the future for the benchmark S&P 500 index was down 0.4 per cent. That for the Dow Jones Industrial Average lost 0.3 per cent.

Data showed on Friday, the S&P 500 fell by 1 per cent after the government reported the economy added 517,000 jobs in January. This data was double in December 260,000 and more than double the 185,000 expected by economists. Average hourly wages were 4.4 per cent higher in January than a year earlier. That was lower than December's 4.8 per cent raise but above expectations. Central bankers worry wage growth may push up consumer prices.

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The data presented has put down the hopes of the investors that lower inflation might persuade the Fed and other central banks to ease off plans for more rate increases. The investors are in worry that the central bankers might be willing to tip the global economy into recession to stop inflation that is near multi-decade highs.

Despite warning by officials some traders were expecting the Fed to cut rates late this year. The officials of the European Central Bank have issued similar warnings. Despite that, the S&P 500 turned in its fourth weekly gain in the past five. It is 15.6 per cent above its low point in October.

The Dow Jones Industrial Average dropped 0.4 per cent and the Nasdaq composite sank 1.6 per cent.

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In Asia, the Shanghai Composite Index fell 0.8 per cent to 3,237.69 while the Nikkei 225 in Tokyo advanced 0.7 per cent to 27,693.65. The Hang Seng in Hong Kong sank 2 per cent to 21,222.16.

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- With inputs from agencies
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