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Markets plunge amid Fed rate hike fears as FTSE closes in red

FTSE  Federal Reserve Board Chairman Jerome Powell leaves a news conference after Powell announced the Fed raised interest rates by three-quarters of a percentage point as part of their continuing efforts to combat inflation, following the Federal Open Market Committee meeting on interest rate policy in Washington, U.S., November 2, 2022. REUTERS/Elizabeth Frantz
Wall Street and FTSE lower as the Federal Reserve's most closely watched inflation measure came in stronger than expected. Photo: Elizabeth Frantz/Reuters

The FTSE 100 and European stocks finished in the red this Friday as a surge in consumer spending and inflation in January across the US sparked concerns that the Federal Reserve will stick to its hawkish stance for longer.

The FTSE 100 (^FTSE) lost 0.36% to close at 7,878 points, while the CAC 40 (^FCHI) in Paris lost 1.44% to 7,212 points. In Germany, the DAX (^GDAXI) retreated 1.45% to 15,251.

Across the pond, US stocks tumbled as the Federal Reserve's most closely watched inflation measure came in stronger than expected, in another sign that price pressures have become sticky into 2023.

The Dow Jones (^DJI) lost 1.16% to 32,770 points. The S&P 500 (^GSPC) tumbled 1.38% to 3,957 points and the tech-heavy NASDAQ (^IXIC) fell 1.90% to 11,369.

The personal consumption expenditures price index increased 0.6% from a month earlier, the most since June. On an annual basis, the index rose to 5.4% from 5.3%, dashing hopes that price pressures might have eased.

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Back in London, British Airways owner IAG (IAG.L) was the biggest faller, losing 7, despite saying it swung to a full-year profit as international travel recovered from the COVID pandemic.

Outside the FTSE 100, Cineworld (CINE.L) shares nosedived 38% as equity holders face wipeout.

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The world’s second-largest cinema chain said that it had been approached by “a number” of potential suitors, but none of them had been willing to pay in cash to buy the whole business.

Meanwhile, Brent crude (BZ=F) slipped and was trading at around $82/barrel despite anticipated supply constraints as Russia prepares to cut production in March.

In Asia, Tokyo’s Nikkei 225 (^N225) rose 1.29% to 27,543 points, while the Hang Seng (^HSI) in Hong Kong lost 1.63% to 20,020. The Shanghai Composite (000001.SS) slipped 0.62% to 3,267 points.

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