TRADING is expected to be volatile on international stock markets this week in the wake of a sharp fall New York late on Friday on fears of another rise in US interest rates.
Attention is now focused on important US economic data due to be released this week. The markets are waiting to see if key consumer price figures indicate that a rise in interest rates is on the cards.
The Dow Jones Index dropped 148 points on Friday night to close at 6,319, while US Government bond prices fell sharply. The yield con the benchmark 30 year bond rose to 7.16 per cent, its highest level in over nine months.
It was the fifth consecutive week of losses for the Dow in the US. Just a month ago the Dow was showing a gain of nearly 10 per cent for the year. It is now down almost one per cent in 1997.
Friday's sell off on Wall Street followed the announcement of stronger than expected US producer price data and an upwards revision of retail sales figures previous months. The fall in share prices, which happened after European markets had closed for the weekend, reflected fears that US interest rates will have to be pushed up again to curb inflation.
Last month the US Federal Reserve raised rates by a quarter of one percentage point but markets are now expecting another increase of a quarter to a half point.
