Major global stock markets fell Friday ahead of data on U.S. employment costs that might influence Federal Reserve decisions on interest rate hikes to cool inflation.

London and Frankfurt opened lower. Tokyo and Seoul advanced while Shanghai and Hong Kong declined.

Wall Street futures were mixed after U.S. stocks declined Thursday for a third day as investors tried to figure out how quickly the Fed might raise interest rates. Markets have been volatile since the Fed said in mid-December stimulus that is boosting stock prices would be wound down sooner than planned after inflation spiked to a 39-year high.

Parsing Powell's Remarks

Stocks are on a roller coaster ride investors try to figure out what the Fed will do after Powell said this week inflation pressures aren't easing.

What was particularly important about Federal Reserve Chairman Jerome Powell's comments on Wednesday, January 26, was the fact that he "neither confirmed nor discounted the possibility of raising rates by 50 basis points instead of 25 -- meaning that we could see hikes [at a 50 BPS pace] this year," Mikkel Morch, executive director at cryptocurrency hedge fund ARK36 tells Newsmax Finance.

"While Powell did, indeed, sound dovish at the beginning, it seems that he failed to offer enough reassurance to really turn the tide of the bearish sentiment that has gripped the markets since last week," Morch continues. "Powell signaled that the Fed is prepared to let stocks go deeper into the correction territory to follow through on its mandate of keeping the prices stable."

The Employment Cost Index due out Friday is expected to show the price of American labor rose by about 1.2% over the previous quarter in the final three months of 2021.

“Another strong wage gain could amplify market expectations” of an unusually large rate hike of 0.5 percentage points as early as March, Anderson Alves of ActivTrades said in a report.

In early trading, London's FTSE 100 lost 0.3% to 7,531.13 and the DAX in Frankfurt fell 1.4% to 15,311.15. The CAC 40 in Paris shed 0.7% to 6,975.01.

On Wall Street, the future for the Dow Jones Industrial Average index was down 192 points, or 0.56%. Nasdaq and the benchmark S&P 500 were essentially flat.

On Thursday, the S&P 500 fell for a third day, losing 0.5% after official data showed the U.S. economy grew 5.7% last year, its strongest rate since 1984′s 7.2% jump.

S&P 500 on the Verge of a Correction

The index is within 10 points of entering a correction, meaning a drop of 10% from its Jan. 3 all-time high.

The Dow slipped less than 0.1%. The Nasdaq composite dropped 1.4%.

In Asia, the Shanghai Composite Index lost 1% to 3,361.44 and the Hang Seng in Hong Kong shed 1.1% to 23,550.08.

The Nikkei 225 in Tokyo surged 2.1% to 26,717.34, recovering most of its losses from the previous day's 2.5% slide.

The Kospi in Seoul rose 1.9% to 2,663.34 and Sydney's S&P-ASX 200 advanced 2.2% to 6,988.10.

India's Sensex gained less than 0.1% to 57,322.38. New Zealand and Singapore declined while other Southeast Asian markets rose.

After Hong Kong markets closed, the territory's government reported its economy grew 6.4% last year after economy weakened as anti-coronavirus controls were tightened. 

In energy markets, benchmark U.S. crude rose 31 cents to $86.92 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the price basis for international oils, advanced 23 cents to $88.40 per barrel in London.

The dollar gained to 115.53 yen from Thursday's 115.31 yen. The euro declined to $1.1134 from $1.1142.