MARKET REPORT: Global equity markets suffer another day of heavy losses as investors worry about the outlook for economies around the world
Global stock markets suffered another day of heavy losses as investors worried about the outlook for economies around the world.
Just a day after the Bank of England raised UK interest rates to 1% as skyrocketing inflation could tip Britain into recession, the FTSE 100 index fell 1.5% , or 115.33 points, to 7387.94.
The mid-cap FTSE 250 – which has more exposure to the UK economy – fell 1.4%, or 270.29 points, to 19,819.67.
Seeing red: On Wall Street, stocks fell again at the open after a sharp sell-off on Thursday evening
There were similar losses in Europe with Germany down 1.6% and France down 1.7%.
On Wall Street, stocks fell again at the open after a sharp sell-off on Thursday night that saw the tech-heavy Nasdaq and the Dow Jones Industrial Average plunge. The rout came a day after the Federal Reserve raised interest rates to the highest in years – by 0.5 percentage points – and warned that more were to come.
Yesterday in early trading, the Nasdaq fell 2.1%, while the Dow lost another 0.7%.
With rising interest rates in the United States, the dollar hit a 20-year high against a basket of currencies from around the world. The pound fell below $1.23 for the first time since June 2020 amid concerns over the UK outlook.
As investors wrestled with what’s next, Bank of England chief economist Huw Pill said he faced a delicate balancing act in seeking to raise interest rates enough to control inflation without harming the economy.
And after City broker Numis warned that “investor confidence remains relatively fragile”, investment bankers and traders could take home smaller bonuses afterwards.
In its half-year report, it said revenue of £74million was 36% lower than the same period last year.
While its earnings per share fell 43% to 14.6p, the biggest fall was in profit which fell by two-thirds to just £13.4m.
The cut is likely to see government checkbooks recoup less tax from Square Mile workers receiving smaller bonuses.
And Numis, despite posting its second-best half, could not escape investors’ fears over the war in Ukraine.
Analysts have also warned that Germany could already slide into recession after a 3.9% plunge in industrial production in March as the invasion of Ukraine took its toll.
U.S. jobs numbers, meanwhile, showed employment rose stronger than expected by 428,000 last month, which did little to deter the Fed from further rate hikes in the coming months.
On the rise: The US Federal Reserve raised interest rates this week
The fall in US tech stocks sent ripples across the Atlantic to the London stock market, with online supermarket Ocado down 3.6%, or 29.8p, to 800.2p while the portal d Rightmove estate agent fell 7.5%, or 45.6p, to 558.8p. Oil stocks edged higher as the price of crude surged above $113 a barrel.
After reporting windfall profits – and sparking a new row over windfall taxes on energy companies – Shell rose 0.3%, or 6.5p, to 2,299.5p while BP gained 1.9%, or 7.75p, to 426.65p. Insurance group Beazley said it expects losses of around £40.5m as a result of the war in Ukraine.
Shares rose 5.9%, or 23.8p, to 430.2p as Lloyd’s of London insurer Hiscox also hit the highs, climbing 5.9%, or 51.6p, to 926, 6p after Morgan Stanley raised its price target to 1194p from 1159p.
Building materials retailer CMO said it has seen cost inflation of 5.5% over the past year and expects that to accelerate.
Chief executive Dean Murray said he saw lower inflation than rivals because of his product mix, but saw supply pressures driving up prices.
Revenue rose 46% to £76.3m in the year to December, buoyed by its acquisition of Total Tiles.
The shares were flat at 127.5p.