SINGAPORE — European markets sank in early trading Thursday ahead of U.S. inflation data that may lift bond yields and possibly push interest rates higher.
In Asia, losses on Wall Street overnight snowballed, triggering a slump in technology stocks. China's benchmark hit a four-year low and Tokyo's Nikkei 225 fell by an unusually wide margin of almost 4
"Equity markets were pulverized today," with investors in "full out retreat," Stephen Innes of OANDA said in a commentary. The "latest sneeze" from Wall Street "could morph into a global markets pandemic," he added.
Investors are wary of possible further U.S. interest rate hikes, which would raise the cost of corporate borrowing and weigh on economic growth.
On Wednesday, U.S. President Donald Trump said the Federal Reserve "is making a mistake" with its campaign of rate increases. "I think the Fed has gone crazy," he charged.
"Equity investors are surprised by the pace at which rates have risen," Marcella Chow, global market strategist at J.P. Morgan Asset Management, said in a report.
France's CAC 40 dropped 1.3
Sentiment also has been dampened by the spreading U.S.-Chinese tariff fight over Beijing's technology policy. The International Monetary Fund cut its outlook for global growth this week, citing interest rates and trade tensions.
The U.S. Treasury is due to release a currency report that some analysts suggest might change the official stance on China's exchange rate policy. Chow said it was unclear whether the Treasury might label Beijing a "currency manipulator" — a status that could trigger penalties — or whether it could be "another pretext for the next round of tariffs."
Adding to potential U.S.-China tensions, the Justice Department announced Wednesday it arrested an official of China's Ministry of State Security on charges of trying to steal trade secrets from U.S. aerospace companies.
Tokyo's Nikkei 225 gave up 3.9
Technology stocks slid in Asia. Tencent, China's most valuable tech company, dropped 6.8
U.S. indexes were set to extend their losses. Dow futures were 1
Francis Tan, an investment strategist at UOB Private Bank, believes that the markets will pick up. "The valuation of U.S. stocks, especially tech stocks, is still pretty high and there could be some profit-taking actions now," Tan said.
The dollar eased to 112.24 yen from 112.27 yen late Wednesday. The euro rose to $1.1543 from $1.1523.
Oil futures fell. U.S. crude gave up $1.10 to $72.07 a barrel. The contract settled at $73.17 in New York. Brent crude, the international standard, dropped $1.36 to $81.73 a barrel.
AP Business Writer Joe McDonald in Beijing contributed to this report.
Annabelle Liang, The Associated Press