Inflation worries send global stock markets to two-week lows

World stocks hit a two-week low on Friday as rate hike guidance from the European Central Bank and jitters over upcoming U.S. inflation data stoked concerns about global growth.

The ECB said on Thursday it would deliver its first interest rate rise since 2011 next month, followed by a potentially larger move in September.

Analysts at Deutsche and Morgan Stanley lifted their eurozone rate hike forecasts on Friday.

Investors expect the Federal Reserve to raise interest rates by 50 basis points next week, especially if U.S. consumer price data on Friday confirms elevated inflation.

The consensus forecast sees a year-over-year inflation rate for May of 8.3 percent, unchanged from April.

“A lot of focus is on this current number, it’s not going to be a big move,” said Matthias Scheiber, global head of portfolio management for multi-asset solutions at Allspring.

“I don’t think it will derail what central banks currently have on their minds.”

However, rate rises may hit growth, Scheiber said, adding that he had turned slightly underweight on equities in recent weeks as a result of this concern.

MSCI’s world equity index (.MIWD00000PUS) fell 0.22% to its lowest since May 26, and was heading for a 2 percent fall for the week.

U.S. stock index futures ticked up 0.19% after the S&P 500 (.SPX) and Nasdaq (.IXIC) fell more than 2 percent on Thursday in their biggest daily percentage declines since mid-May.

The European, Australian, Japanese indices were all down. However, China’s blue chip CSI300 index (.CSI300) was up 1.5 percent.

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