TOKYO - Global stock markets dipped Tuesday as the prospect of higher U.S. interest rates dimmed the outlook for equities and boosted the dollar.
France's CAC 40 lost 0.3 percent in early trading to 4,921.75 and Germany's DAX shed 0.3 percent to 11,546.31. Britain's FTSE 100 slipped 0.3 percent to 6,857.05. U.S. shares were set to fall, with Dow and broader S&P 500 futures down 0.6 percent.
Exceptionally strong U.S. jobs data on Friday, and the higher inflation that will eventually bring, raised the chances that the U.S. Federal Reserve will bring forward the timing of its first interest rate hike since the 2008 global financial crisis. Ultra-low interest rates and other monetary stimulus have been a boon for stock markets for several years as investors sought higher returns. But a return to more normal levels for interest rates in the world's biggest economy might spell an end to the bull market for stocks.
"The news out of the U.S. on Friday has certainly sent shock waves through all global markets, as rate rises from the Fed build momentum," said IG strategist Evan Lucas in a market report. "Commentators are getting nervous about the direction of the U.S. market in 2015" and higher interest rates are likely to "spell the end to the bull market," he said.
Japan's benchmark Nikkei 225 fell 0.7 percent to 18,665.11 despite the yen weakening against the dollar, which usually helps export stocks. South Korea's Kospi dropped 0.4 percent to 1,984.77. Hong Kong's Hang Seng shed 0.9 percent to 23,896.98. Australia's S&P/ASX 200 added nearly 0.1 percent to 5,824.20. Southeast Asian markets were mixed and India's benchmark dropped.
Benchmark U.S. crude was down 30 cents to $49.70 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 39 cents to close at $50 a barrel on Monday. Brent crude, a benchmark for international oils, dropped 39 cents to $58.14 a barrel in London.
The dollar gained across the board, reflecting the strengthening U.S. economy and interest rate hike expectations. The euro fell to $1.0748 from $1.0844 late Monday. The dollar rose to 121.91 yen from 121.44 yen.