World stock markets pulled further back from all-time highs as investors unwound positions on growing expectations that the U.S. Federal Reserve will raise interest rates later this month.
The total market value of global stock markets hit an all-time high of $56.7 trillion earlier this week, having added more than $4 trillion since Donald Trump’s election as U.S. president last November.
More than half of those gains were down to the rally in U.S. stocks, into which investors have pumped money for four of the past five weeks, according to the latest data from Bank of America Merrill Lynch and fund tracker EPFR.
Stock futures on the S&P 500 ESc1 SPc1 were down 0.3 percent as investors reassessed the market’s lofty valuations in the face of rising borrowing costs, Reuters reports.
The dollar index which measures the greenback’s strength against a basket of six major currencies was poised for its fourth straight weekly gain, though it was about 0.1 percent lower on Friday.
“The U.S. dollar has been snapped up across the board as a March Fed hike is heavily priced in,” said Sean Callow, a senior currency strategist at Westpac.
“All it took was about a hundred comments from Fed officials, but markets have finally decided that “fairly soon” means less than two weeks and that perhaps 3 hikes this year means 3 hikes this year.”
Expectations of a Fed rate hike soured the party on Wall Street, however, as financials led major U.S. indices lower. That weakness spilled over to Europe where the benchmark STOXX 600 fell for a second day dragged lower by industrials and consumer-related stocks.
