FTSE sinks as inflation fears scare markets
US markets have withstood a wider correction after opening this afternoon, while Europe has remained stuck in the red – but not to as great an extent as in previous days.
Global stocks were heading for their worst week of the year on Thursday, as a larger-than-expected rise in inflation in the United States worried bond markets and prices for metals, crops and cryptocurrencies were burning with sudden stops.
Asia suffered a beat after Wall Street overnight, London’s FTSE 100 was down 1.3% as the US opened and the Euro Stoxx 600 was down 0.54%. The German Dax suffered a decline of 0.17% while the French Cac fell 0.21% – not nearly as bad as much deeper falls in previous sessions.
“Inflationary pressures will increase, and they will not be temporary,” said Jeremy Gatto, chief investment officer at Unigestion. “What does that mean? In fact, (interest) rates will go up.”
But Wall Street resisted the trend, with the S&P 500 posting a 0.78% jump at the start of its trading session and the highly technological Nasdaq climbing more than 1% after steep declines. The Dow Jones rose 0.6 pc.
U.S. markets were blinded on Wednesday when data showed U.S. consumer prices rose the most in nearly 12 years in April. It showed a booming demand in a context of economic reopening encountering equally powerful supply constraints in the United States and abroad.
The jump, which triggered the worst one-day drop in the S&P 500 since February, was largely due to outsized increases in airfares, used cars and accommodation costs, all driven by the pandemic and likely to be transient.
Fed officials were quick to downplay the impact of the one-month figures, with Vice President Richard Clarida saying stimulus would still be needed for “some time,” but traders were not. not fully convinced.
“The big question today is not how far inflation will rise, but for how long inflation will rise,” said Hugh Gimber, global market strategist at JPMorgan Asset Management.
“As for the (global market) slippage today, I think that highlights just how uncomfortable investors are evaluating the Fed’s new mandates. They still don’t get it. completely when the Fed moves. “