Equity markets are suffering a Christmas chill owing to concerns about rising interest rates and a possible recession

London (AFP) - Stock markets mostly fell Friday as fears of a global recession returned owing to expectations of more aggressive US interest-rate hikes to fight sky-high inflation.

A profit-warning from top chipmaker Micron and worries about China’s surging Covid cases added to the gloom.

London’s benchmark FTSE 100 index closed up very slightly in a shortened trading day before the festive break.

Asia’s main stock markets closed with losses after Wall Street ended well in the red Thursday.

Revised figures showed the US economy grew a lot more in July-September than first thought, while jobless claims rose less than expected last week.

The readings suggested that despite almost a year of rate hikes and decades-high inflation, activity remained strong and the Fed had much more work to do.

That came as Micron Technology said the industry’s worst supply glut for more than 10 years meant it would struggle to return to profit next year.

It also saw a big drop in sales and a heftier loss than forecast this quarter.

“The Grinch selloff is firmly in place after Micron delivered a gloomy outlook and as better-than-expected US economic data supported the Fed’s case for more… rate increases,” said OANDA’s Edward Moya.

“Global coordinated central bank tightening has yet to fully impact most of the economic readings for the major economies and that should have investors nervous over earnings downgrades and credit risks.”

In Asia Friday, Tokyo’s main stocks index shed one percent as Japan’s inflation hit a 41-year high, reinforcing expectations that the country’s central bank would lift interest rates next year.

The yen surged this week after the Bank of Japan tweaked monetary policy, in a surprise move that hinted at future rate hikes.

Hopes meanwhile that China’s growth will surge as it rolls back its zero-Covid strategy have been overshadowed by a surge in cases across the country that has kept people at home, and battered travel and economic activity.

“The spike in Covid-19 infection rates following the easing of mobility restrictions will still constrain economic activity in the December-January time frame,” said Guan Yi Low of M&G Investments.

Still, expectations that demand for crude oil will pick up in the new year, as well as a drop in US stockpiles, is providing healthy support to the commodity, with both main contracts up more than two percent Friday.

A senior official also warned Friday that Russia could cut up to seven percent of its oil production next year as it follows through on a vow not to sell crude to nations that impliment an international price cap over Moscow’s invasion of Ukraine.

- Key figures around 1230 GMT -

London - FTSE 100: UP 0.1 percent at 7,473.01 points (close)

Frankfurt - DAX: UP 0.2 percent at 13,947.35

Paris - CAC 40: DOWN 0.2 percent at 6,503.02

EURO STOXX 50: DOWN 0.1 percent at 3,818.62

Tokyo - Nikkei 225: DOWN 1.0 percent at 26,235.25 (close)

Hong Kong - Hang Seng Index: DOWN 0.4 percent at 19,593.06 (close)

Shanghai - Composite: DOWN 0.3 percent at 3,045.87 (close)

New York - DOWN 1.1 percent at 33,027.49 (close)

Dollar/yen: UP at 132.70 yen from 132.36 yen on Thursday

Euro/dollar: UP at $1.0611 from $1.0598

Pound/dollar: UP at $1.2066 from $1.2036

Euro/pound: DOWN at 87.92 pence from 88.02 pence

Brent North Sea crude: UP 2.2 percent at $82.77 per barrel

West Texas Intermediate: UP 2.4 percent at $79.35 per barrel