GLOBAL MARKETS-Stocks fall after inflation data raises fears

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GLOBAL MARKETS-Stocks fall after inflation data raises fears

SINGAPORE Reuters -- Stocks fell on Thursday after data showed U.S. inflation was persistently high and investors worried about the economic toll of aggressive interest rate hikes to tame it.

The U.S. markets fell sharply after the news. S&P 500 futures rose by 0.5% in Asia. Foreign exchange trade was volatile, but has left the dollar index within a whisker of a two-decade high.

On Thursday, nursing was pinned below $30,000 because of an almost 27% wipeout that took $11,000 off its price in about a week.

Consumer prices in the US rose 8.3% for the 12 months to April. It was slower than the 8.5% pace of a month earlier and raised hopes that the pace of price rises has peaked. However, it was higher than market forecasts for 8.1%, confirming concerns that rates will need to rise quickly to tame it.

We're currently very embedded with two more hikes of 50 basis points on the agenda. Damian Rooney, director of institutional sales at the brokerage Argonaut said that equity markets are the end of free money.

He said that people were probably delusional six months ago with the rise of U.S. equities on hopes and prayers and the madness of meme stocks, and suddenly were going a little bit back to what is reality.

Apple shares fell 5% overnight, dragging the S&P 500 down 1.65% and the Nasdaq down 3.2%.

Short-dated Treasuries were dumped in the wake of the data, but the longer end of the curve rallied as investors worried that steep rate hikes would slam the brakes on growth.

The benchmark 10 year Treasury yield fell six basis points bps overnight and dropped four bps in Tokyo trade to 2.8877%. The yield curve was flattening as the gap between two-year and 10 year yields narrowed.

The Fed should be pushed to a tipping point before odds point towards a hard landing, according to NatWest Markets' U.S. rates strategist Jan Nevruzi.

The Nasdaq is down more than 8% in May and more than 25% this year, as higher U.S. yields draw money out of expensive tech stocks.

The collapse of the so-called stable coin TerraUSD has highlighted the turmoil, with the collapse of the criptocurrency markets falling down.

A weakened growth picture outside the United States is battering investor confidence as a war in Ukraine threatens an energy crisis in Europe and the lengthening lockdowns in China cause another spanner into supply chain chaos.

Sunac China said it missed a bond interest payment and will miss more as China's real estate sector is in the grip of a credit crunch.

The uncertainty about nearly everything except the U.S. rate rises has benefited the dollar. It held the euro near recent lows of $1.0524 on Thursday and hovered around 129.78 yen, while trade sensitive currencies were squeezed.

The Australian dollar was volatile in the wake of the U.S. inflation data, but was unable to hold its ground above $0.70 and last bought $0.6943.

The pound was at a two-year low of $1.2230 as a standoff over post-Brexit trade rules for Northern Ireland.

On Thursday, the Hong Kong Monetary Authority spent $202 million to support the Hong Kong dollar, which hit the weaker end of its peg to the dollar.

Oil surged after a Wednesday surge in commodity trade due to concerns about westbound gas flows from Russia to Europe.

The price of crude futures was 0.7% lower than the price of $106.78 a barrel, while the U.S. crude was 0.6% lower at $105.07 a barrel.

British activity and growth data is due later in the day.