By Herbert Lash and Dhara Ranasinghe NEW YORK/LONDON, Jan 25 (Reuters) – A gauge of global equity markets slid from five-month highs and Treasury yields rose on Wednesday as corporate results fueled recession fears, overshadowing recent optimism that the Federal Reserve could soon back off aggressive monetary tightening. Microsoft Corp’s MSFT. Olackluster outlook late Tuesday indicated more gloom ahead for the tech sector after the bellwether warned customers were cautious about spending in an uncertain economy. Downbeat results from Boeing on Wednesday amid ongoing supply chain constraints added to inflation concerns, pressured by a resilient labor market that will likely keep the Fed vigilant about squashing inflation. “The enemy is inflation, the catalyst is the labor market and that’s the bottom line,” said Johan Grahn, head of ETFs at Allianz Investment Management in Minneapolis. “While we see some changes, they’re not significant enough to scare the Fed away from its stated marching orders,” he said. The Dow Jones Industrial Average .DJI fell 0.8%, the S&P 500 .SPX slid 0.97% and the Nasdaq Composite .IXIC skidded 1.26%. Trade in European stocks was lacklustre, as signs of an improving economic outlook in the euro zone fed worries about further rate hikes. The broad pan-European STOXX 600 index .STOXX lost 0.29% and MSCI’s gauge of global stock performance .MIWD00000PUS shed 0.59%. The fastest tightening of monetary policy since the 1980s has led investors to weigh inflation concerns against recessionary fears, leading markets to higher, then lower. The Bank of Canada signaled it would likely halt further hikes after lifting its key interest rate to 4.5% on Wednesday. Earlier the Australian dollar hit a five-month high as rising inflation data bolstered the case for another rate increase from the Reserve Bank of Australia (RBA) next month. In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS hit a seven-month high. Trading volume was depressed as Chinese and Taiwanese markets were still closed for the Lunar New Year holiday. Longer-dated Treasury yields rebounded ahead of the Fed policy-setting meeting next week. Futures are pricing in a 94.7% probability of a 25 bps hike. The yield on 10-year Treasury notes US10YT=RR was up 1.5 basis points to 3.482%, but well below the Fed’s projection that its target rate will stay above 5% into next year. AUSSIE DOLLAR SURGE The Australian dollar surged to $0.7123 AUD=D3 after the latest inflation data. Australia’s currency is up 1.6% this week and is poised for its biggest weekly gain in more than two months. The Canadian dollar fell 0.36% versus the greenback at 1.34 per dollar after the central bank’s outlook. The euro EUR= up 0.03% to $1.0888. Data showing German business morale brightened in January did little to push the single currency higher for now. Germany’s Ifo institute said its business climate index rose to 90.2, in line with the consensus, according to a Reuters poll of analysts, and up from 88.6 in December. Oil prices were up slightly in light volumes after government data showed a smaller-than-anticipated build in US crude inventories, countering weak economic data from Tuesday. US crude futures CLc1 recently rose 1.01% to $80.94 per barrel and Brent LCOc1 was at $86.68, up 0.64% on the day. Global FX performance http://tmsnrt.rs/2egbfVh Global asset performance http://tmsnrt.rs/2yaDPgn (Editing by Bernadette Baum) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.