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Global equities fell Friday as investors contemplated the prospect that interest rates could remain higher for longer and on concerns over China’s economy.

Traders have been spooked after minutes from the US central bank’s July meeting hinted that further increases in borrowing costs could lie ahead, as policymakers grapple with inflation.

Inflation in the United States has come down sharply in recent months but remains at 3.2 per cent and some decision-makers at the Fed have suggested its two-per cent goal can only be achieved and maintained by pushing interest rates higher.

That has led to a re-evaluation of the outlook for monetary policy, with optimism that last month’s rate hike could be the last giving way to bets on one more before the end of the year.

Expectations of another Fed hike have pushed 10-year Treasury yields — a gauge of future rates — close to their highest levels since the global financial crisis. They eased off on Friday but remained elevated.

Fed chief Jerome Powell’s speech at the annual Jackson Hole economic symposium in Wyoming, which begins next Thursday, will be closely followed for clues about the bank’s plans.

Shares in the eurozone fell by more than one per cent in mid-afternoon trading. In London, the FTSE 100 was 1.2 per cent lower.

Official data showed British retail sales fell more than expected in July, with poor weather blamed.

On Wall Street, US stocks extended recent losses in early trading.

‘Global stock markets took a Friday flop as investors grappled with the potential of sustained higher global interest rates,’ Stephen Innes, managing partner at SPI Asset Management, said.

‘The trajectory of global stocks mirrored the downturn on Wall Street for much of the week as encouraging US economic data quashed hopes that the Federal Reserve would swiftly implement rate cuts.’.

Asian markets were well in the red, too, including Hong Kong, which was down for a sixth consecutive trading day.

Investors are also keeping an anxious eye on China, where authorities are struggling to get a grip on the economy as its recovery from Covid peters out.

And the property crisis is also back in the headlines.

On Thursday, Evergrande Group filed for bankruptcy protection in the United States, a measure that protects its US assets while it attempts to push through a restructuring.

That comes days after Country Garden said there were ‘major uncertainties in the redemption of corporate bonds’, suggesting it could default on a bond payment next month.

There are now concerns about property firms that are backed by the government, with Bloomberg reporting that many are warning of widespread losses.

It said 18 of the 38 state-owned enterprise builders traded in Hong Kong and China posted preliminary losses in the first half of the year, compared with 11 that warned of full-year losses in 2022.

‘China’s property slowdown is already hurting all developers, including the large government-linked ones,’ said Zerlina Zeng of CreditSights Singapore.

‘We do not expect the situation to materially improve in the second half.’