Global stocks fall as inflation persists and economic fears persist

Global stocks tumbled Thursday to an 18-month low, amid markets concerns that persistently high inflation and forcing central banks to continue tightening monetary policy.

In the US, stocks ended the trading session slightly lower, as investors toyed with fears of alarming inflation with signs that it might peak. The S&P 500 has come close to confirming a bear market since it pulled back from all-time highs in January.

In Europe, economic concerns were exacerbated by a German warning that Russia was now using energy supplies as a “weapon”.

The Stoxx 600 index in Europe fell 0.75 percent. The MSCI index of stocks worldwide is down 0.69 percent, as of 2109 GMT.

This leading global indicator is almost 20 percent lower for the year.

The Dow Jones Industrial Average fell 103.81 points, or 0.33 percent, to 31730.3 points, the Standard & Poor’s lost 5.1 points, or 0.13 percent, to 3930.08, and the Nasdaq Composite increased 6.73 points, or 0.06 percent, to 11370.96.

The dollar rose to a 20-year high, as global economic concerns boosted the safe haven’s appeal.

The dollar index rose 0.711 percent after touching 104.92, the highest level since December 12, 2002. The euro fell 0.02 percent to $1.0377, after falling to 1.0352, the lowest since January 3, 2017.

Oil prices settled mixed amid supply concerns due to the European Union’s pending embargo on Russian oil. Brent crude fell six cents to settle at $107.45 a barrel. West Texas Intermediate crude rose 42 cents, or 0.4 percent, to settle at $106.13.

The US Labor Department said its producer price index for final demand rose 0.5 percent in April, slower than the 1.6 percent rise in March, as rising costs for energy products slowed.

Consumer price gains slowed to an 8.3 percent year-on-year increase in April from the 8.5 percent pace in March, but it beat economists’ expectations of 8.1 percent.

Analysts at ANZ Bank wrote: “It’s been a rough time for financial assets since the Fed raised interest rates…and the subsequent strong US job market, and CPI data reinforced concerns about the extent of the task facing the Fed.”

May sale

The main indicators for the Pan-Asian Pacific closed 2.5 percent lower at their lowest level in 22 months overnight. Japan’s Nikkei index fell 1.8 percent. Emerging market shares lost 2.28 percent.

US Treasury yields fell. The yield on the 10-year Treasury US10YT = RR fell 7.1 basis points to 2.843 per cent after US government bonds fell to a morning low of 2.816 per cent.

The German 10-year bond yield, the benchmark for Europe, fell 15 basis points to 0.85 percent, the lowest in nearly two weeks.

The flight in cryptocurrency markets continued, with the collapse of the so-called stablecoin TerraUSD; Selling in bitcoin and a 15 percent drop in the second largest cryptocurrency, ether.

Tether, currently the world’s largest stablecoin by market capitalization with a value directly pegged to the dollar, has broken below the so-called “coin peg” to the US dollar. The global sell-off has wiped out more than $1 trillion from the cryptocurrency markets. About 35 percent of that loss came this week.

Referring to other cryptocurrencies, Richard Asher, head of OTC trading at BCB Group, said: “The collapse of the TerraUSD peg has had some bad and predictable repercussions. We have seen massive liquidations in BTC, ETH and most ALT currencies.”

Precious metals also declined. And spot gold fell 1.7 percent to $ 1821.52 an ounce. US gold futures fell 1.64% to $1,823.80 an ounce.

Benchmark copper on the London Metal Exchange fell 3.6 percent to $9,000 a ton in official trading after falling to $8,938. Prices are down 17 percent from a record high of $10,845 reached in March.

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