World stock markets stumbled on Wednesday as signs that the economic outlook is weakening spurred caution, while a bigger-than-expected interest-rate hike from New Zealand lifted the kiwi dollar.
European stocks fell with the broad STOXX 600 index pulling away from Tuesday's one-month highs (.STOXX). U.S. equity futures dipped , and Japan's Nikkei (.N225) fell 1.6% in its biggest one-day percentage fall since mid-March.
MSCI's world equity index (.MIWD00000PUS) pulled further away from Tuesday's almost seven-week highs, while Asia trade was thinned by holidays in Hong Kong and China.
Weak U.S. economic data this week has exacerbated recession worries, taking the edge off recent stock market gains.
Data on Tuesday showed U.S. job openings fell in February to the lowest level in almost two years and data on Monday pointed to weakening U.S. manufacturing activity. U.S. March service sector activity data is due out later.
Interest rate futures have rallied strongly in recent weeks as traders bet that turmoil in the banking sector will tighten up on lending anyway and save the need for the Federal Reserve to do the job.
Markets pricing implies a better-than-even chance that the Fed has finished raising rates and more than 60 bps in cuts this year.
"With the banking worries at least in the background for now focus is on the economic data and central bank policy," said Nordea chief analyst Jan von Gerich.
"There is no fixed way of interpreting the data in markets but it does seem that latest data was not seen as positive for equities by raising growth worries."
In a note, Pictet Asset Management chief strategist Luca Paolini said that with focus turning from inflation to growth risks, Pictet had upgraded U.S. equities to neutral from underweight.
