Global stock markets fell amid fears that US inflation would rise.In the United States, the slot xo online Dow tumbled 474 points to 1.4 percent on Tuesday, the biggest drop in a day since late February.European business groups also saw a sharp drop as fears among traders that rising consumer prices could drive interest rates hikes.The UK standard stock index, FTSE 100, closed 2.47%.The index fell below 7,000 points to 6,947.99 after hitting a post-epidemic high of 7,164 on Monday."The market cannot shake a fear of inflation, which is preventing a recovery from COVID," said Ras Mold, investment director at AJ Bell.Soaring commodity prices are acting as the canary in the coal mine for inflation, with massive infrastructure and stimulus in the US being a key factor.
Stimulant effect
In March, US President Joe Biden signed a 1.9 tonne (£ 1.4m) economic relief bill that saw the government send a $ 1,400 check to most Americans, and last month he set out a plan. Increased government spending on employment, education and social care It led to an accumulation of savings, which are now being spent as the economy reopens, raising prices.Inflation hit 2.6% in the 12 months to March, surpassing the Federal Reserve's 2% target and raising fears it might raise rates to cool things down.There are the same concerns in other economies, but the central bank has already cut its risks.The tech-heavy US Nasdaq stock index initially tumbled more than 2 percent on Tuesday as the market opened. But later lost Sales continued in Asia and Europe, with both France's Cac 40 and Germany's Dax down nearly 2 percent.Ben Yearsley, investment director at Shore Financial, said inflation is likely to improve in the next few months as during the same period last year, the economy closed and oil prices slumped.
He said investors should be concerned if inflation continues to rise. For example, if inflation persists and we keep talking about it in six months, that's a different situation and it could lead to higher interest rates. ”Other analysts raised concerns that new data released by the U.S. Department of Labor on Tuesday showed the number of job vacancies rose 597,000, a record 8.1 million people on the last day of March.The food and hotel sectors boosted the most job vacancies, according to figures showing last week that job growth slowed sharply in April, controlled by an even shortage of workers. There will be a huge fiscal stimulus.On the London Stock Exchange, British Airways owner IAG was one of the biggest failures, with shares tumbling more than 7 percent on negative investor reaction to the government's list of safe-to-go countries.Shares in NatWest Group were down more than 3 percent.The government announced Tuesday morning that it had sold another chunk of the bank, cutting its stake from 59.8 percent to 54.8 percent and adding £ 1.1 billion for taxpayers.
Concerns not only in the market. But only about the United States But it is also the main concern. Like many other governments, the United States supports household income at times when people are unable or unwilling to spend normally.Therefore, savings are accumulated unexpectedly. As restrictions are lifted and vaccinations made people feel more confident, they're more likely to spend most of them. If there is constant distraction in the supply chain, that will further increase the pressure on prices.Will it cause the Federal Reserve and other central banks to change their policy, raise interest rates, or suspend financial asset purchases or quantitative easing?So far, the Fed has said it thinks the increase in inflation is due to "Provisional factors" and said that future inflation expectations are expected. "Good adherence"Therefore, there is no rush to change the policy. But investors are likely to remain wary that inflationary pressures may prove persistent and forcing the Fed to rethink.
