# Shares fall with oil prices amid concerns about U.S. Fed rate hikes
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-02-17
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: Global Stock Markets Fall as U.S. Economic Data Hints at
Meta Description: Global stock markets drop, oil prices lower after U.S. economic data suggests more Fed rate hikes to combat stubborn inflation. Stay updated with Reuters.
URL: https://financedigest.com/shares-fall-with-oil-prices-amid-concerns-about-u-s-fed-rate-hikeshtml

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By Sinéad Carew

NEW YORK (Reuters) – Stock markets around the globe fell on Friday and oil prices settled lower after U.S. [economic data](https://www.financedigest.com/dollar-skids-after-soft-u-s-economic-data-impact-of-opec-cuts-fades.html "Dollar skids after soft U.S. economic data; impact of OPEC+ cuts fades") prompted bets that the Federal Reserve would raise interest rates more than expected and keep them higher for longer to battle stubborn inflation.

Friday’s data showed a year-over-year 0.8% [increase in export prices](https://www.financedigest.com/syngenta-4q-profit-falls-as-raw-material-prices-increase.html "Syngenta 4Q profit falls as raw material prices increase") versus expectations for a decline of 0.2%. This added to the [inflation concerns fueled by Thursday’s data](https://www.financedigest.com/european-shares-rise-as-us-inflation-data-signals-end-of-rate-hike-cycle.html "European shares rise as US inflation data signals end of rate-hike cycle"), which showed accelerating monthly producer prices in January and lower-than-expected unemployment benefits claims for last week.

Along with hawkish comments from two [Fed officials on Thursday, and Goldman Sachs and Bank of America forecasts for three more Fed rate hikes](https://www.financedigest.com/wall-street-slips-dollar-gains-as-fed-seen-hiking-rates-in-may.html "Wall Street slips, dollar gains as Fed seen hiking rates in May") this year, the data led some investors to start bracing for more tightening, according to Shawn Cruz, head trading strategist at TD Ameritrade in Chicago.

The thing that kicked this off yesterday was the [producer prices](https://www.financedigest.com/record-jump-in-german-producer-prices-adds-to-gloomy-outlook.html "Record jump in German producer prices adds to gloomy outlook") coming in elevated. It means one or two things. Companies are going to pass the costs on to consumers, causing more inflation, or absorb these higher costs, which would result in [lower profitability](https://www.financedigest.com/ford-posts-lower-profit-issues-downbeat-outlook-shares-drop.html "Ford posts lower profit, issues downbeat outlook; shares drop"). Either way it’s not good,” said Cruz.

And while the [Fed can potentially influence inflation](https://www.financedigest.com/wall-st-seen-steady-ahead-of-inflation-data-fed-later-in-week.html "Wall St seen steady ahead of inflation data, Fed later in week"), domestically higher export prices point to things the U.S. [central bank](https://www.financedigest.com/central-banks-keep-hiking-rates-amid-banking-turmoil.html "Central banks keep hiking rates amid banking turmoil") has less ability to control.

That shows that [global demand is coming back](https://www.financedigest.com/analysis-at-world-cup-saudi-crown-prince-moves-back-on-to-global-stage.html "Analysis-At World Cup, Saudi crown prince moves back on to global stage") on line. That might make it a little bit more [difficult to bring inflation](https://www.financedigest.com/boes-mann-falling-headline-inflation-high-core-make-policy-difficult.html "BoE’s Mann: Falling headline inflation, high core, make policy difficult") down,” Cruz said.

Traders have [raised their bets on how far they see the Fed hiking](https://www.financedigest.com/dollar-falls-after-fed-raises-rates-forecasts-future-hike.html "Dollar falls after Fed raises rates, forecasts future hike") in recent sessions, and are now pricing in a peak at around 5.3% in September.

The Dow Jones Industrial Average rose 111.21 points, or 0.33%, to 33,808.06, the S&P 500 lost 12.61 points, or 0.31%, to 4,077.8 and the Nasdaq Composite dropped 78.81 points, or 0.66%, to 11,777.03.

The pan-European STOXX 600 index had [closed down 0.20% and MSCI’s gauge of stocks](https://www.financedigest.com/global-stocks-close-in-on-4-week-highs-oil-rises-on-hopes-of-soft-landing.html "Global stocks close in on 4-week highs, oil rises on hopes of ‘soft landing’") across the globe shed 0.41%.

Emerging [market stocks](https://www.financedigest.com/stocks-up-bond-yields-fall-as-markets-mull-a-fed-policy-pause.html "Stocks up, bond yields fall as markets mull a Fed policy pause") lost 1.05%.

U.S. [Treasuries yields](https://www.financedigest.com/wall-street-drops-treasury-yields-gyrate-on-fed-chairman-powells-remarks.html "Wall Street drops, Treasury yields gyrate on Fed Chairman Powell’s remarks") lost ground during the trading day. However, earlier, with the market placing more bets on the Fed keeping rates higher for longer, yields on 10-year notes touched their highest level [since early](https://www.financedigest.com/first-quarter-dash-for-cash-largest-since-early-2020-bofa.html "First quarter ‘dash for cash’ largest since early 2020 -BofA") November at 3.929%.

Benchmark 10-year notes were recently down 1.9 basis points to 3.824%, from 3.843% late on Thursday. The 30-year [bond was last down 1.9 basis points to yield](https://www.financedigest.com/wall-st-stocks-fall-bond-yields-rise-as-china-drops-quarantine-rule.html "Wall St stocks fall, bond yields rise as China drops quarantine rule") 3.8848%, from 3.904%. The 2-year note was last was unchanged to yield 4.6191%, from 4.619%.

While it has since lost ground, the dollar index earlier hit a six-week high against a basket of currencies on Friday as traders ramp up bets for Fed [rate hikes](https://www.financedigest.com/stocks-falter-as-economic-worries-nag-nz-delivers-big-rate-hike.html "Stocks falter as economic worries nag, NZ delivers big rate hike").

However, the greenback lost ground as the session wore on with the [euro recently up 0.23% to $1.0693 while Sterling](https://www.financedigest.com/dollar-outshines-euro-sterling-amid-european-bank-jitters.html "Dollar outshines euro, sterling amid European bank jitters") was last trading at $1.2042, up 0.41% on the day.

The [Japanese yen](https://www.financedigest.com/japanese-yen-gains-as-ueda-set-to-be-named-next-boj-governor.html "Japanese yen gains as Ueda set to be named next BOJ governor") weakened 0.13% versus the greenback at 134.13 per dollar.

Oil futures fell sharply on Friday and registered a weekly decline, pressured by signs of ample supply along with concerns of more [Fed interest rate hikes](https://www.financedigest.com/dollar-hits-one-month-high-against-yen-as-traders-bet-on-fed-rate-hike.html "Dollar hits one-month high against yen as traders bet on Fed rate hike"), which could weigh on demand.

U.S. crude settled down 2.74% at $76.34 per barrel and Brent finished at $83.00, down 2.51% on the day.

Gold prices were up for the day but down for the week weighed down by a [stronger dollar](https://www.financedigest.com/oil-slumps-on-economic-data-stronger-u-s-dollar.html "Oil slumps on economic data, stronger U.S. dollar") and rising bond yields.

Spot gold added 0.3% to $1,842.47 an ounce. U.S. gold futures fell 0.05% to $1,840.40 an ounce.

(Reporting by Sinéad Carew in New York, Nell Mackenzie in London; Editing by Hugh Lawson, Sharon Singleton and Jonathan Oatis)


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