Stocks mostly drop as traders track China, US rates

Major stock markets mostly dropped as warnings that US interest rates would continue to rise and remain elevated for some time offset growing optimism over China's economic reopening after Covid lockdowns.

After a torrid 2022, equities have enjoyed a strong start to the new year thanks largely to Beijing's decision to throw off the shackles of its strict zero-Covid policy, which battered the economy. Markets were experiencing "a mild bout of profit taking after recent gains", said Richard Hunter, head of markets at Interactive Investor.

While there are concerns about the shortterm impact of soaring Covid infections across China, investors are growing increasingly confident in Beijing's pledges of government support, including for the troubled property sector.

Signs that officials are taking a lighter approach to tech firms after a long-running crackdown have also provided support.

But sentiment is still closely linked to the outlook for US monetary policy as the Federal Reserve battles to bring inflation down from four-decade highs.

A recent run of data suggesting the world's largest economy is slowing has provided hope the bank will be able to decelerate the pace of rate hikes and avert a recession-a so-called "soft landing".

Still, policymakers appear determined to keep lifting borrowing costs until they achieve their goal of two percent inflation, from the current 7.1 percent.

In the latest salvo, San Francisco Fed boss Mary Daly said rates would likely go above five percent before the policy board decides to stop lifting, while Atlanta Fed president Raphael

Bostic tipped a similar level though added that they would not be changed for "a long time". The comments dealt a blow to investors hoping for a change of tack later in the year.

"Hawkish comments from a couple of Federal Reserve officials overnight took some of the sheen from Asian trade," Hunter said.

European stock markets were lower around the half-way mark and ahead of Wall Street reopening.

All eyes were now on the release of US consumer price index figures on Thursday, which could play a key role in the Fed's next policy decision at the end of the month.

" Key figures around 1200 GMT The UN chief called Monday for "massive investments" to help Pakistan recover from last year's devastating floods, saying it was "doubly victimised" by climate change and a "morally bankrupt global financial system".

"No country deserves to endure what happened to Pakistan," UN Secretary-General Antonio Guterres told an international conference in Geneva, which is seeking billions of dollars to support recovery from the disaster.

Guterres opened the one-day event appealing to the world to help Pakistan bounce back from floods which submerged a third of the country, killing more than 1,700 people and affecting more than 33 million others.

Pakistan's Foreign Minister Bilawal Bhutto Zardari, who attended with Prime Minister Shehbaz Sharif, called the floods "a climate disaster of monumental scale". Eight million people were displaced, millions of acres of agricultural land were ruined and around two million homes destroyed, while nine million more people were pushed to the brink of poverty.

US stock market indexes recorded a decrease yesterday, after the closing of the trading session on the New York Stock Exchange.

The Dow Jones industrial average fell, recording 339.75 points, or 1.02% to close at 32,930.02 points, and the "Standard & Poor's 500" index closed down 44.89 points, or 1.17%, to 3,808.08 points.

The Nasdaq Composite Index declined by 153.52 points, or 1.47%, or 10,305.24 points.

Earlier, Asian markets built on their positive start to the year Wednesday as investors brushed off a drop on Wall Street and weighed China's reopening moves with surging Covid cases, while recession concerns kept any rally in check.

China's shift out of almost three years of zero-Covid has been widely welcomed but the breakneck speed at which authorities have lifted restrictions has led to an explosion of cases across the country, dealing another battering to economic activity.