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Why stock markets are getting the jitters

March 13, 2000
Web posted at: 10:17 AM EST (1517 GMT)

By Tony Karon

(TIME.com) -- Could it be the Ides of March? No, more likely it's the Ides of Inflation that has investors everywhere looking more than a little skittish. Stock markets across Asia and Europe fell heavily Monday, and the Dow Jones, which shed some 82 points Friday, was expected to follow suit. While some of the Asian indexes that fell furthest were responding to domestic stimuli -- Japan's slide back into recession in the fourth quarter of last year shaved almost three points off the Nikkei, while the Taipei bourse lost nearly 7 percent over fears associated with next Saturday's presidential election -- others, such as Korea and Hong Kong, also saw investors casting a nervous eye toward Washington, where data on the prospects for inflation to be released later this week may help shape the Federal Reserve's bias on interest rates at their March 21 meeting.

While the beast of inflation has almost miraculously been kept at bay in recent years despite the U.S. economy growing at a rate 3 percent above what the Fed traditionally considers its speed limit, rising oil prices may be making some analysts nervous about a pre-emptive interest rate hike. Oil-producing countries have been trying for the past two years to enforce a worldwide production cut in order to raise prices out of the doldrums, and in recent months they've enjoyed dramatic success. Prices at the U.S. gas pump climbed 12 cents in the past two weeks alone, and although Energy Secretary Richardson assured the nation Sunday that OPEC countries are set to agree to a production increase at their March 27 meeting, it remains to be seen how the economy will absorb the inflationary pressure of the recent increases. Given the downturn on global equity markets, however, one place unlikely to see much inflation Monday is Wall Street.

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