HONG KONG, May 12 (AFP): Asian and European equities slumped on Thursday following Wall Street's lead, after a key US report renewed fears of inflation and a tightening of monetary policies.
Stocks have been volatile for much of 2022, fuelled by China's Covid-19 lockdowns, Russia's invasion of Ukraine, and surging inflation that has dampened consumer sentiment.
Investors had been looking to the April US consumer price report in hopes that easing inflation would lower pressure on the Federal Reserve to hike interest rates, but the rise of 8.3 percent was higher than expected.
"Wall Street thought it was going to be done with inflation rearing its ugly head, but that does not appear to be the case," said Edward Moya, senior market analyst at OANDA.
"Inflation is still expected to decelerate over the next few months, but it won't be sharp given the rising prices on gas, hotel, airfares, and possibly a wide range of goods that will be impacted by China's Covid lockdowns."
Americans have felt the pinch of rising food prices, including big increases in dairy and cereal products.
The index for meat, poultry, fish and eggs surged 14.3 percent -- the biggest gain since May 1979.
US President Joe Biden called April's overall slowdown "heartening" -- March saw a peak of 8.5 per cent -- but acknowledged inflation was still a major challenge.
"Bringing it down is my top economic priority," he said.
After the release of the report, US stocks see-sawed through the day and ended with losses.
All three major indices finished firmly in the red. The tech-rich Nasdaq slumped 3.2 per cent, weighed by big losses for Apple and Meta.
