WORLD EQUITY BLEED AMID SOARING INFLATION
US stock futures wobbled on Thursday after the major averages extended a relentless selloff overnight, as investors digested stronger-than-expected inflation figures. Futures contracts tied to the three major indexes shifted between gains and losses. In regular trading on Wednesday, the Dow fell 1.02%, the S&P 500 lost 1.65% and the Nasdaq Composite plunged 3.18%, with all three averages sinking further to their lowest in over a year. The moves came as data showed consumer prices jumped 8.3% in April, which was higher than the 8.1% forecast and still running close to a 40-year high of 8.5% logged in March. The core CPI also came in higher than expected at 6.2% in April, stoking worries among investors that elevated prices may persist. Investors continued to gauge how aggressively the Federal Reserve will tighten monetary settings to rein in rising prices, with uncertainty surrounding their next move set to drive further market volatility.
European stocks traded sharply lower on Thursday, erasing strong gains of the previous session, as recession fears mount and rising concerns that inflation has yet to peak. Both the German DAX and the pan-European Stoxx 600 were down by more than 1%, with basic resources leading losses in all sectors. On the earnings front, Siemens said Q2 profits fell and its exit from Russia cost €600 million, while Coca-Cola’s bottling business, Coca-Cola HBC, said net sales rose 31% over a year earlier last quarter.
The FTSE 100 pulled back more than 2% to levels not seen in eight weeks on Thursday, weighed down by commodity-linked stocks, as persistent inflation jitters and downbeat economic data forced investors to erase gains of the previous session. Preliminary data showed UK’s economic growth slowing to 0.8% q-o-q in the first quarter, below analyst estimates of 1%, while output in March unexpectedly fell 0.1% over a month earlier. On corporate updates, Coca-Cola’s bottling unit in the UK, Coca-Cola HBC, said net sales rose 31% over a year earlier last quarter. Meantime, investment firm Hargreaves Lansdown saw Q1 net client inflows plunge 46% from last year to £2.5 billion, as market volatility and the war in Ukraine increased risk aversion among British savers.
The FTSE MIB index was nearly 2% lower at the 23,260 level on Thursday. The industrial and the healthcare sectors booked the steepest declines, with CNH Industrial and Recordati both losing more than 3.5%. Among the heavyweight financial sector, UniCredit shares eased off recent highs and traded 0.8% lower following its 10% surge yesterday, as investors continued to monitor reports that it was in talks with interested parties on acquiring the Italian lender’s Russian unit. On the other hand, tech shares were slightly higher, led by a 1% gain for STMicroelectronics.
The BSE Sensex plunged by 1158 points or 2.14% to close at a 2-month low of 52,930.3 on Thursday, extending declines for the fifth session as worries of more interest rate hikes, ongoing Ukraine conflict, and lockdowns in China weighed heavily on investor sentiment. Soaring inflation has been a major concern in India since past few months, largely driven by rising fuel and food prices. It has stayed well above the Reserve Bank of India's upper tolerance limit for 3 consecutive months. Banks and financials led the losses with 29 out of 30 stocks ending in the red. Among the individual stocks, IndusInd Bank dragged the most (-5.82%), followed by Tata Steel (-4.13%), and twin stocks Bajaj Finance (-3.76%) and Bajaj Financial Services (-3.53%). On the other hand, Wipro is the only stock that ended in green (+0.91%).
