Global equity markets fell while US Treasury yields rose on Friday following stronger-than-expected economic data that stoked worries the Federal Reserve will prolong its interest rate hiking cycle.
Commerce Department data showed that consumer spending, which accounts for two-thirds of US economic activity, rose by 1.8 per cent in January, the largest increase in nearly two years and exceeding analyst estimates, according to a Reuters poll.
Furthermore, the personal consumption expenditures price index, the Fed's preferred inflation measure, accelerated by 0.6 per cent last month, the biggest increase in six months, bringing the index to 5.4 per cent for the 12 months through January.
The strong data deepened a market sell-off across most equities, with the MSCI world equity index, which tracks shares in 50 countries, shedding 1.17 per cent. European stocks fell 1.04 per cent.
"The fact we've got another data item that shows the economy is not slowing enough to hopefully give the Fed confidence that they're in front of the inflation problem - that's why the market is down," said Robert Stimpson, portfolio manager at Oak Associates Funds in Akron, Ohio.
On Wall Street, all three major indexes posted their biggest weekly drop of the year, led by a sell-off of stocks in so-called cyclical sectors including technology, communication services, consumer discretionary, and even healthcare.
The Dow Jones Industrial Average fell 1.02 per cent to 32,816.92, the S&P 500 lost 1.05 per cent to 3,970.04 and the Nasdaq Composite dropped 1.69 per cent to 11,394.94.
US Treasury yields jumped, with benchmark 10-year yields hitting 3.9452 per cent, and two-year yields, which are highly sensitive to Federal Reserve policy, rising as high as 4.8156 per cent, the highest since November 4.
"The risk to the market is that it was premature in its anticipation of a Fed pivot. The Fed is going to continue raising interest rates higher than people think and for longer than people think," Mr Stimpson added.
Oil prices edged higher in volatile trade, bolstered by the prospect of lower Russian exports but pressured by rising inventories in the US and concerns over global economic activity.
Brent crude futures settled at $83.16 a barrel, up 1.2 per cent. West Texas Intermediate US crude futures settled at $76.32 a barrel, rising 1.2 per cent. The US dollar strengthened against other major currencies, with the dollar index up 0.65 per cent at a seven-week high and the euro down 0.48 per cent at $1.0544.
Gold prices dropped to their lowest levels in eight weeks, pushed down by the stronger dollar and higher bond yields. Spot gold dropped 0.6 per cent to $1,810.97 an ounce, while US gold futures fell 0.47 per cent to $1,810.20 an ounce.
Specs
%3Cp%3E%3Cstrong%3EEngine%3A%3C%2Fstrong%3E%201.5-litre%20turbo%204-cylinder%20%2F%202.0%20turbo%204-cylinder%20(S3)%0D%3Cbr%3E%3Cstrong%3EPower%3A%3C%2Fstrong%3E%20148bhp%20%2F%20328bhp%20(S3)%0D%3Cbr%3E%3Cstrong%3ETorque%3A%3C%2Fstrong%3E%20250Nm%20%2F%20420Nm%20(S3)%0D%3Cbr%3E%3Cstrong%3EOn%20sale%3A%3C%2Fstrong%3E%20December%0D%3Cbr%3E%3Cstrong%3EPrice%3A%3C%2Fstrong%3E%20TBA%0D%3C%2Fp%3E%0A
BMW M5 specs
Engine: 4.4-litre twin-turbo V-8 petrol enging with additional electric motor
Power: 727hp
Torque: 1,000Nm
Transmission: 8-speed auto
Fuel consumption: 10.6L/100km
On sale: Now
Price: From Dh650,000
Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
War 2
Director: Ayan Mukerji
Stars: Hrithik Roshan, NTR, Kiara Advani, Ashutosh Rana
Rating: 2/5
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
FFP EXPLAINED
What is Financial Fair Play?
Introduced in 2011 by Uefa, European football’s governing body, it demands that clubs live within their means. Chiefly, spend within their income and not make substantial losses.
What the rules dictate?
The second phase of its implementation limits losses to €30 million (Dh136m) over three seasons. Extra expenditure is permitted for investment in sustainable areas (youth academies, stadium development, etc). Money provided by owners is not viewed as income. Revenue from “related parties” to those owners is assessed by Uefa's “financial control body” to be sure it is a fair value, or in line with market prices.
What are the penalties?
There are a number of punishments, including fines, a loss of prize money or having to reduce squad size for European competition – as happened to PSG in 2014. There is even the threat of a competition ban, which could in theory lead to PSG’s suspension from the Uefa Champions League.
Killing of Qassem Suleimani
