MARKET REPORT: Global stock markets suffer another day of heavy losses as investors fret over outlook for economies around the world
Global stock markets suffered another day of heavy losses as investors fretted over the outlook for economies around the world.
Just a day after the Bank of England raised UK interest rates to 1 per cent while warning sky-high inflation could tip Britain into recession, the FTSE 100 index fell 1.5 per cent, or 115.33 points, to 7387.94.
The mid-cap FTSE 250 – which is more exposed to the British economy – fell 1.4 per cent, or 270.29 points, to 19819.67.
Seeing red: On Wall Street, shares fell again on the opening after a brutal sell-off on Thursday night
There were similar losses in Europe with Germany down 1.6 per cent and France down 1.7 per cent.
On Wall Street, shares fell again on the opening after a brutal sell-off on Thursday night saw the tech-heavy Nasdaq dive and the Dow Jones Industrial Average plunge. The rout came a day after the Federal Reserve raised interest rates by the most in years – by 0.5 percentage points – and warned of more to come.
In early trading yesterday, the Nasdaq fell 2.1 per cent, while the Dow shed another 0.7 per cent.
With interest rates on the rise in the US, the dollar roared to a 20-year high against a basket of currencies around the world. The pound fell below $ 1.23 for the first time since June 2020 amid worries about the outlook in the UK.
As investors grappled with what’s next, Bank of England chief economist Huw Pill said it faced a fine balancing act in seeking to raise interest rates enough to tame inflation without hurting the economy.
And after City broker Numis warned ‘investor confidence remains relatively fragile’, investment bankers and traders could take home smaller bonuses after.
In its half-year report, it said revenues of £ 74million were 36 per cent lower than the same period last year.
While its earnings per share dropped by 43 per cent to 14.6p, the biggest slump was in profit which fell by two-thirds to just £ 13.4million.
The decline is likely to see government checkbooks reclaim less tax from Square Mile workers receiving smaller bonuses.
And Numis, despite recording its second best half-year, could not shield itself from investor fears over the Ukraine war.
Analysts also warned that Germany may already be sinking into recession after a 3.9 per cent slump in factory output in March as the invasion of Ukraine took its toll.
Jobs figures in the US, meanwhile, showed employment rose by a stronger than expected 428,000 last month – doing little to dissuade the Fed from further rate hikes in the coming months.
On the up: The US Federal Reserve increased interest rates this week
The slide in tech stocks in the US sent ripples across the Atlantic to the stock market in London, with online supermarket Ocado down 3.6 per cent, or 29.8p, at 800.2p while estate agent portal Rightmove fell 7.5 per cent, or 45.6p, to 558.8p. Oil stocks edged higher as the price of crude jumped above $ 113 a barrel.
After reporting bumper profits – and sparking a fresh row over windfall taxes on energy companies – Shell was up 0.3 per cent, or 6.5p, to 2299.5p while BP gained 1.9 per cent, or 7.75p, to 426.65p. Insurance group Beazley said it expects to see losses of around £ 40.5million as a result of the war in Ukraine.
Shares rose 5.9 per cent, or 23.8p, to 430.2p as fellow Lloyd’s of London insurer Hiscox also hit the heights, climbing 5.9 per cent, or 51.6p, to 926.6p after Morgan Stanley raised its target price to 1194p from 1159p.
Building materials retailer CMO said it saw 5.5 per cent cost inflation over the past year and expects this to accelerate.
Chief executive Dean Murray said it has seen inflation below its rivals due to its mix of products but has seen supply pressures move prices higher.
Revenue grew by 46 per cent to £ 76.3million over the year to December, buoyed by its acquisition of Total Tiles.
Shares were flat at 127.5p.