Global stock markets fell Thursday as fears grew over what strong inflation and a new wave of Covid-19 might mean.
Europe’s top benchmarks closed with losses of more than 1.5 percent following some heavy drops in Asia.
In New York, the Dow Jones index also slumped in midday exchanges.
The US Federal Reserve had said Wednesday that a recent jump in US inflation had been higher than expected as the world’s biggest economy recovers from the pandemic-induced downturn.
That fuelled concerns the Fed and other central banks could reduce their emergency stimulus packages and raise interest rates sooner than expected.
Analysts warn that would put a dampener on the recovery from coronavirus lockdowns.
And news that Japan would bar fans from the Olympic Games crystallised the potential threat of yet another Covid-19 wave.
“Global markets have chosen today to price in the dawning realisation that Covid isn’t nearly done damaging lives and economies,” remarked AJ Bell analyst Danni Hewson.
Meanwhile, the European Central Bank revised its inflation target slightly higher Thursday and said in a statement that there might be a “transitory period in which inflation is moderately above target”.
IG analyst Josh Mahony said: “Despite the expectation that we should be filled with optimism over a second-half rebound, we are instead seeing traders focus on the bumpy road ahead and implications of rising inflation levels.”
Fed officials believe the US central bank needs to be ready to pull back on its massive support programme if strong inflation persists, according to minutes from its June policy meeting.
“It took some time, but the Fed has finally acknowledged rising inflationary forces,” said Louis Navellier of Navellier & Associates.
A crackdown by Chinese authorities on ride-hailing app Didi has sparked growing fears of stronger regulation of the country’s tech giantsPhoto: AFP / Jade GAO
New York – DOW: DOWN 0.7 percent at 34,436.34 points
Euro Stoxx 50: DOWN 2.1 percent at 3,991.66
London – FTSE 100: DOWN 1.7 percent at 7,030.66 (close)
Frankfurt – DAX 30: DOWN 1.7 percent at 15,420.64 (close)
Paris – CAC 40: DOWN 2.0 percent at 6,396.73 (close)
Tokyo – Nikkei 225: DOWN 0.8 percent at 28,118.03 (close)
Hong Kong – Hang Seng Index: DOWN 2.9 percent at 27,153.13 (close)
Shanghai – Composite: DOWN 0.8 percent at 3,525.50 (close)
Euro/dollar: UP at $1.1838 from $1.1803 at 0720 GMT
Pound/dollar: DOWN at $1.3765 from $1.3767
Euro/pound: UP at 86.00 pence from 85.73 pence
Dollar/yen: DOWN at 109.83 yen from 109.99 yen
Brent North Sea crude: UP 0.7 percent at $73.95 per barrel
West Texas Intermediate: UP 0.7 percent at $72.72 per barrel
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