NEW YORK : World equities fell on Thursday to an 18-month-low, with markets dogged by fears high inflation would persist and force central banks to keep tightening monetary policy.
In the United States, stocks ended a whipsaw session slightly lower, as investors juggled fears of nagging inflation with signs it could be peaking. The S&P 500 came within striking distance of confirming a bear market since swooning from its all-time high reached in January.
In Europe, economic worries were exacerbated by a German warning that Russia was now using energy supplies as a “weapon.”
Europe’s continent-wide STOXX 600 index was down 0.75per cent. MSCI’s gauge of stocks across the globe was down 0.69per cent, as of 5:09 p.m. ET (2109 GMT).
That flagship global index is nearly 20per cent lower for the year.
The Dow Jones Industrial Average fell 103.81 points, or 0.33per cent, to 31,730.3, the S&P 500 lost 5.1 points, or 0.13per cent, to 3,930.08 and the Nasdaq Composite added 6.73 points, or 0.06per cent, to 11,370.96. [.N]
The dollar climbed to a 20-year high, as global economic fears boosted its safe-haven appeal.
The dollar index rose 0.711per cent after touching 104.92, its highest since Dec. 12, 2002. The euro was down 0.02per cent to US$1.0377 after falling to 1.0352, its lowest since Jan. 3, 2017.
Oil prices settled mixed on supply fears due to the pending European Union ban on Russian oil. Brent crude fell 6 cents to settle at US$107.45 a barrel. WTI crude rose 42 cents, or 0.4per cent, to settle at US$106.13.
The U.S. Labor Department said the producer price index for final demand rose 0.5per cent in April, slower than the 1.6per cent surge in March, as rising costs of energy products moderated.
Consumer price gains slowed to an 8.3per cent rise in April year-on-year from the 8.5per cent pace of March, but exceeded the 8.1per cent economists had forecasts.
“It has been a punishing time for financial assets since the Fed raised rates … and the subsequent strong US jobs market, and CPI data have reinforced concerns over the extent of the task facing the Fed,” analysts at ANZ bank wrote.
Graphic – World stocks suffer worst start to a year in recent record : https://fingfx.thomsonreuters.com/gfx/mkt/lgvdwgdgopo/Pastedper cent20imageper cent201652345427073.png
SELL IN MAY
The main pan-Asia Pacific indexes closed down 2.5per cent at a 22-month low overnight. Japan’s Nikkei fell 1.8. Emerging market stocks lost 2.28per cent.
U.S. Treasury yields slid. The yield on 10-year Treasury notes US10YT=RR was down 7.1 basis points to 2.843per cent after the benchmark U.S. government bond fell to a morning low of 2.816per cent.
Germany’s 10-year yield, the benchmark for Europe, fell as much as 15 bps to 0.85per cent, its lowest in nearly two weeks.
The rout continued in cryptocurrency markets, with the collapse of the so-called stablecoin TerraUSD; selling in bitcoin and a 15per cent slump in the next-biggest-crypto, ether.nL3N2X337U]
Tether, currently the world’s largest stablecoin by market cap with a value directly tied to the dollar, broke below its so-called U.S. dollar “peg.” The global sell-off has now wiped more than US$1 trillion off crypto markets. Around 35per cent of that loss has come this week.
“The collapse of the peg in TerraUSD has had some nasty and predictable spillovers. We have seen broad liquidation in BTC, ETH and most ALT coins,” said Richard Usher, head of OTC trading at BCB Group, referring to other cryptocurrencies.
Precious metals also dropped. Spot gold fell 1.7per cent to US$1,821.52 an ounce. U.S. gold futures fell 1.64per cent to US$1,823.80 an ounce. [MET/L]
Benchmark copper on the London Metal Exchange (LME) was down 3.6per cent at US$9,000 a ton in official trading after falling as low as US$8,938. Prices are down 17per cent from a record high of US$10,845 reached in March.
(Reporting by Elizabeth Dilts Marshall; additional reporting by Marc Jones in London and Tom Westbrook in Singapore; Editing by Chizu Nomiyama, Will Dunham, Kirsten Donovan, Alison Williams and David Gregorio)