The tech-heavy Nasdaq Composite fell further on Thursday, after a dismal morning for European stocks, as weaker-than-expected inflation data and signs of a slowdown in China fueled worries. concern for the world economy.
The Nasdaq index fell 2% at the open. The S&P 500 blue-chip index fell 1.2% after falling 1.6% on Wednesday, as data indicated that inflation continued to heat up in the United States, raising expectations of a Federal Reserve The US (Fed) will increase interest rates.
“The market is no longer interested in tomorrow’s companies,” said Rosie Bullard, portfolio manager at James Hambro & Partners. . . Given how much the tech industry has grown in recent years, there’s still room for it to go down. “
In Europe, Britain’s FTSE 100, Euro Stoxx 600 and Germany’s Dax index were all down around 2% in afternoon trade, while Japan’s Topix and Hong Kong’s Hang Seng fell 1.2% and 1.2%, respectively. 2.2%.
Thursday’s global stock market plunge marked the latest in a string of tough days for equities. Nasdaq is down 27% this year and has lost more than a fifth of its value in the past 30 trading days, analysts at Bespoke Investment Group wrote.
“The Nasdaq’s six-week slump of more than 20 percent does not always lead to a recession, but more often than not, when lightning fills the sky, thunder often follows,” they said.
Markets worry about persistent inflation after consumer price index is released on Wednesday showed an increase of 8.3% on an annual basis in April. That was down from 8.5% in March but higher than the 8.1% expected by economists.
“The Fed is under pressure to raise rates again and the move has to be quick in the summer. Then we will see the impact on [economic] Juliette Cohen, strategist at CPR Asset Management said.
“Global stocks are moving in price on three key themes of stagnant inflation: higher inflation, slowing growth and rising rates,” said Robert Buckland, an analyst at Citi.
In the bond market, the yield on the 10-year Treasury note fell 5 basis points to 2.86%. Yields fall as bond prices rise, suggesting growth concerns as investors seek haven assets.
Growth is also coming under pressure from reduced financial support in the era of the pandemic, supply chain bottlenecks and a slowdown in China due to the strict coronavirus lockdowns, Cohen added. “It’s a bleak environment for the markets,” she said.
The dollar index, which measures the currency against six others, rose 0.6 percent to 104.5 points, its highest level in more than 10 years.
Pound sterling drops 0.3% against dollar, as data shows UK economy shrinks unexpectedly for the first time this year putting more pressure on the nation’s currency.
The euro fell 1% to $1.04, its lowest level since January 2017. China’s renminbi lost 1% to 6.78/USD, in the latest sign that the Beijing government is on the mend. allows the tightly controlled currency to weaken for stimulus flag need for the country’s exports.
Copper prices, an indicator of economic sentiment given the metal’s widespread use, fell below $9,000 a tonne for the first time in more than six months.
“Chinese demand is extremely weak, although smelter restrictions that once kept prices in China have now been eased,” said Colin Hamilton, an analyst at BMO Capital Markets.
Additional reporting by Neil Hume
