Global stocks fall on British data, Fed rate hike talk

In this Oct. 2, 2014, file photo, the statue of George Washington on the steps of Federal Hall faces the facade of the New York Stock Exchange. Global stocks fell on Tuesday, August 16, 2016, as British data indicated effects of Brexit. AP

NEW YORK, United States — Global stocks retreated Tuesday as British inflation data stoked worries about Brexit fallout and a senior US central banker said an interest rate hike could come as early as September.

Equity markets were broadly lower, with bourses in Tokyo, Paris, London and Frankfurt all falling and US markets pulling back from record highs.

Britain’s 12-month Consumer Price Index rose by 0.6 percent in July as a pound weakened by the British vote to exit the European Union increased import prices.

Analysts expect British inflation to rise further in the coming months as the pound holds at multi-year lows against the dollar and euro.

On the positive side, investor confidence in Germany rebounded slightly this month, as the shock over the June Brexit vote begins to wear off, a leading survey showed.

The ZEW investor confidence index gained 7.3 points to stand in positive territory at 0.5 points in August, recovering partially from a massive 26-point slump in July.

London’s benchmark FTSE closed 0.7 percent lower, while  Frankfurt’s DAX 30 shed 0.6 percent and the Paris CAC 40 lost 0.8 percent.

In the US, the S&P 500 lost 0.6 percent after William Dudley, head of the Federal Reserve’s New York branch, told Fox Business that a rate hike was possible next month and that Wall Street investors were too “complacent” about the prospect of higher rates over the next year.

The remarks show the US central bank anticipates hiking interest rates “more quickly than the market expects,” said Gregori Volokhine, president of Meeschaert Capital Markets.

Analysts also said US stocks were due for a pause after all three major indices had surged to new records.

“Today is nothing more than taking a breather,” said Art Hogan, chief market strategist at Wunderlich Securities.

In Japan, the Nikkei tumbled 1.6 percent after a sharp rally in the yen hit investor sentiment.

On the corporate front, shares in mining giant BHP Billiton closed up nearly one percent in London, despite announcing an annual net loss of $6.39 billion.

BHP’s worst-ever result was caused by a mine dam disaster in Brazil and weak commodity prices. But investors were cheered by a larger-than-expected dividend payment.

And in Frankfurt, shares in German industrial gas supplier Linde soared 11 percent higher after it confirmed it was in “preliminary discussions” about a possible merger with US rival Praxair. Praxair rose 2.7 percent.