Global stocks selloff intensifies on recession fears
Global stock markets sank Thursday, propelled by rampant inflation and growing recession fears as another major Chinese city went into lockdown.
Frankfurt, London and Paris equities each slid about 1.5 percent in afternoon trading as record-high eurozone inflation fuelled fears that borrowing costs are set to climb even higher, as the region faces rocketing winter energy costs due to Russia's war on Ukraine.
On Wall Street, the Dow opened down 0.5 percent at 31,359.86 points.
Asian markets posted losses as investors braced for more interest rate hikes, which seek to quell runaway inflation but could derail economic activity, while oil prices tumbled on demand worries.
"More pain is likely for investors as Europe's energy crunch gets worse", said City Index analyst Fawad Razaqzada.
The European Central Bank will announce its latest monetary policy decision next Thursday, after delivering its first rate hike in a decade in July.
- 'Tougher times ahead' -
"Markets remain unable to snap their recent losing streak, with investors still positioning for tougher times ahead," said Interactive Investor analyst Richard Hunter.
"Central to current concerns are recessionary fears in the US and a beleaguered China.
"With the world's two largest economies under pressure, the immediate outlook is poor."
Asian equities weakened further Thursday as traders continued to digest shrinking factory activity in powerhouse economy China.
Shanghai also dropped after news that the Chinese city of Chengdu would effectively lock down around 16 million people in a bid to contain a Covid-19 outbreak, likely dealing another blow to a stuttering economy.
It was a "morose session with a flight to the dollar," said Swissquote Bank analyst Ipek Ozkardeskaya.
Wall Street had slid Wednesday as Treasury yields -- a key gauge of future interest rates -- rose further as a broadly healthy report on US private jobs showed there was room for the Federal Reserve to continue tightening monetary policy.
A government jobs report Friday will be closely watched by traders hoping for an idea about the next move by the bank.
"Rising Treasury yields, reports that China has locked down Chengdu (city of 21.2 million residents) for Covid testing, a litany of manufacturing PMI readings for August around the globe that were sub-50.0 (i.e. indicative of contraction), and some disappointing earnings guidance ... are among the headline catalysts contributing to the weak disposition of the futures market," Briefing.com analyst Patrick J. O'Hare wrote to clients ahead of the start of trading in New York.
PMIs, which are surveys of executives about current business conditions and the outlook for the future, are valued by the market as providing near real-time indications about the condition of the economy.
However Fed officials have made clear they are willing to tolerate an economic slowdown in order to bring interest rates down.
The prospect of more U.S. rate hikes continued to push the dollar higher, with 140 yen within reach for the first time since 1998.
The greenback was also at its strongest level against the pound since the height of the pandemic in 2020, with sterling buying less than $1.16.
- Key figures at around 1330 GMT -
New York - Dow: DOWN 0.5 percent at 31,359.86 points
London - FTSE 100: DOWN 1.7 percent at 7,163.46
Frankfurt - DAX: DOWN 1.3 percent at 12,669.90
Paris - CAC 40: DOWN 1.6 percent at 6,029.01
EURO STOXX 50: DOWN 1.4 percent at 3,466.46
Tokyo - Nikkei 225: DOWN 1.5 percent at 27,661.47 (close)
Hong Kong - Hang Seng Index: DOWN 1.8 percent at 19,597.31 (close)
Shanghai - Composite: DOWN 0.5 percent at 3,184.98 (close)
Euro/dollar: DOWN at $0.9982 from $1.0054 on Wednesday
Pound/dollar: DOWN at $1.1565 from $1.1622
Euro/pound: UP at 86.31 pence from 86.50 pence
Dollar/yen: UP at 139.55 yen from 138.96 yen
West Texas Intermediate: DOWN 2.1 percent at $87.65 per barrel
Brent North Sea crude: DOWN 2.0 percent at $93.73
Source: Agence France Presse
| Copyright © 2012 Naharnet.com. All Rights Reserved. | https://naharnet.com/stories/en/292306 |