Major markets dive on heightened recession fears

AFP

2 min read
A pedestrian walks past an electronic share price board showing the closing numbers on the Tokyo Stock Exchange (L) and a foreign exchange board showing the yen's rate against the US dollar (R) in Tokyo on June 13, 2022.
Kazuhiro NOGI / AFPA pedestrian walks past an electronic share price board showing the closing numbers on the Tokyo Stock Exchange (L) and a foreign exchange board showing the yen's rate against the US dollar (R) in Tokyo on June 13, 2022.

Global equities, oil prices and bitcoin plunged Monday

Global equities, oil prices and bitcoin plunged Monday on heightened recession fears triggered by runaway inflation.

The dollar, however, gained versus major rivals, benefiting from its status as an investment haven and expectations of aggressive interest-rate hiking from the Federal Reserve. 

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The US currency struck a 24-year peak against the yen before retreating, while it broke above 78 Indian rupees for the first time. It jumped one percent versus the pound.

"The hangover from a higher-than-expected US inflation reading is continuing to cause scissoring pain throughout the markets, as it extinguishes the hope the US Federal Reserve might be able to take its foot off the pedal on interest rate rises," noted AJ Bell investment director Russ Mould.

US and European stocks had already tumbled Friday following the inflation data, with Asia following suit Monday.

European stock markets extended pre-weekend losses, while London took a hit also from data showing the UK economy contracted in April for a second month in a row.

Wall Street opened sharply lower, with the blue-chip Dow down around two percent and the tech-heavy Nasdaq falling around three percent.

World oil prices, whose surge has contributed massively to soaring inflation, slid around one percent as the high cost of living increases recession expectations.

The possibility of more Covid restrictions in China's biggest cities also weighed on crude futures as the country is a major oil consumer.

Fresh Covid outbreaks in Shanghai and Beijing have seen authorities reimpose containment measures.

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