Global stock markets are falling as investors become concerned about the economy

Ken Ibenne

Ken Ibenne

Following significant dips in the US and Asia, fears of increasing costs and faltering economies have moved to the UK and European stock markets.

On Thursday, the FTSE 100 index of prominent corporations fell 2.1 percent, while the big stock markets in France and Germany also fell.

On Wednesday, US stocks fell the most in a single day since the beginning of the Covid epidemic in 2020.

Gloomy projections from big US retailers rattled the markets.

Countries are also battling with strong increases in inflation – the UK’s hit a 40-year high of 9% in April – and there are fears that certain economies could stagnate when interest rates are raised in a bid to combat price spikes.

“A red wall of anxiety has risen up throughout financial markets, with investors becoming increasingly concerned that economies are on the verge of entering recession,” Susannah Streeter, senior investing and markets analyst at Hargreaves Lansdown, said.

The bad news from US retailers affected shares in UK companies that rely on consumer spending. Tesco, the UK’s largest retailer, plummeted 5%, while Unilever, the consumer goods behemoth, slumped 4.4 percent.

Royal Mail, meanwhile, was the largest loser on the UK market, falling more than 12% after posting poor results and warning of “severe headwinds” from growing expenses.

The FTSE 100 fell 152 points to 7,286, while the Cac-40 index in France and the Dax in Germany also fell 1.8 percent and 1.6 percent, respectively.

In Asia, the Nikkei index in Japan fell 1.9 percent, while the Hang Seng in Hong Kong fell 2.5 percent.

The Dow Jones Industrial Average fell 3.5 percent on Wednesday after the S&P 500 index, which tracks shares of a broad range of America’s largest corporations, fell more than 4%.

The Nasdaq, which is dominated by technology, dropped 4.7 percent. The losses came on top of weeks of losses on US financial markets.

Target claimed unexpectedly high gasoline and freight costs had slashed into profits, which had half compared to a year ago, causing significant declines on US markets.

It also stated that when prices rise, consumers are spending more on necessities and less on luxury products like televisions and clothing.

Target’s remarks came after Walmart’s similarly gloomy report earlier this week.

“After seeing Target, people are scared that more earnings [estimates] may have to be lowered.” said Thomas Hayes, chairman of New York-based Great Hill Capital.

“Consumer confidence is at multi-year lows and is inextricably linked to inflation. People are searching for evidence of inflation slowing, and Target provided none today.”

Target’s stock dropped 25% after the announcement, the greatest drop in more than three decades.

Although official US government data recently showed retail sales increased by a robust 0.9 percent in April, several analysts have warned that the figures, which are not adjusted for inflation, may understate signals of slowing – especially for lower-income people.

Amazon announced a surprising decline in online sales in the first three months of this year earlier this year.

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