The markets of Europe and Asia also showed a decline. Thus, STOXX Europe 600 fell by 1.82% to 415.02 points. The Hong Kong Hang Seng index slipped down immediately by 3.39% to 21,067.58 points, the Japanese Nikkei 225 fell by 3.01% to 26,987.44 points, and the mainland China CSI 300 index fell by 1.17% , to 4189.35 points.
The reasons for this trend are in the report on the rise in inflation last month. Prices in the United States rose by 8.6% in annual terms, although growth was forecast slightly lower - only up to 8.3%. This is a record acceleration at the end of 1981. Acceleration of inflation in May causes fear among investors. They believe that due to rising prices, the US Federal Reserve System (Fed) will maintain the pace of rate hikes until September. Now a number of market participants are expressing fears that the Fed may go for a rate hike by 75 basis points at once if inflationary pressure does not ease. The last time the Fed raised rates by 75 basis points at once was in November 1994. The next Fed meeting will take place on June 15.
Note that the European Central Bank has kept the base interest rate on loans at zero. If inflation rates are maintained or accelerated, “a more significant rate increase would be appropriate”, - the ECB believes. The regulator said it would halt the asset buyback program, raising fears of financial stress on the bloc's weak economies.