Global markets fall on inflation fears, China growth worries

Global markets fall on inflation fears, China growth worries

On Monday, global markets fell sharply as fears of rising inflation and a slowdown in China's export growth fuelled worries about the health of the world economy.

In Asia-Pacific markets, Europe and the US all went into the red as investors fretted that global growth is weaker, at a time when central banks are raising interest rates to rein in surging inflation.

In London, the FTSE 100 fell to its lowest level in more than seven weeks, dropping 1.7% or 125 points in afternoon trading at 7,268, with mining companies among the fallers. Japan's Nikkei had closed down 2.5% earlier on Monday.

In April, the stock price fell after China s export growth hit a near two-year low of 3.9% a year ago, down from 14.7% growth in March. Imports were flat as China s Covid outbreaks cut demand and disrupted manufacturing.

Analysts said the slowdown showed that the world's second-largest economy was suffering from the lockdowns in big cities like Shanghai, which have affected factory production and snarled up logistics chains.

The impact of inflation and higher interest rates are two of the biggest concerns. According to Mihir Kapadia, chief executive of Sun Global Investments, said that China's export growth is at a two-year low because of the severe Covid lockdowns.

Kapadia said that the supply chain disruptions will affect the earnings of companies around the world and affect their stocks.

European markets fell to a two-month low, down 1.7% in afternoon trading.

The S&P 500 index dropped 1.7% at the beginning of trading on Wall Street after its worst week of losses in more than a decade.

Commodities weakened, with copper prices hitting their lowest since mid-December in London at $9,160 7,440 a tonne. Aluminium, zinc, nickel, lead, and tin prices fell because of concerns that China's restrictions are hitting manufacturing output.

Emerging market shares hit their lowest level since June 2020, as China s slowing economy added to pressures from rising global interest rates and the ongoing disruption from the Ukraine war.

On Saturday, the Chinese premier, Li Keqiang, warned that China's employment situation was complex and grave and called for government departments and regions to prioritize measures to support and retain jobs.

China has a serious economic impact because of the lockdowns.

Fresh selling of the US government bonds caused the yield, or interest rate, on the 10 year Treasury note to the highest since November 2018 and caused it to go up the yield on the 10 year Treasury note to the highest since November 2018. The US dollar was at a new 20 year high due to expectations of further increases in US interest rates this year to tackle rising inflation, which is currently at 8.5%.

Marios Hadjikyriacos of the brokerage XM said there was no stop to the US dollar. Stress in equity markets, worries about a synchronised global economic slowdown and the relentless grind higher in US yields continue to drive up demand for the reserve currency. The risky assets, such as cryptocurrencies, were also hit. Since July 2021, it has fallen to its lowest level since July 2021, dropping below $32,700, and has lost half of its value in the last six months.