Inflation continues to scare the horses in financial markets with stocks galloping lower

Geralt/Pixabay
  • European indices slide after Wall Street falls
  • Inflation causes another jump in anxiety
  • Traders await U.S. consumer price index for May
  • New Covid curbs in China help push oil down slightly

Inflation scares horses in financial markets

“Inflation is what scares the horses in financial markets and stocks in Europe are galloping lower after another pretty wild run for US stocks. On Wall Street, the tech-heavy Nasdaq fell 2.7% and the S&P 500 fell 2.3%, while the FTSE 100 and FTSE 250 lost 0.8% in early trading. In Frankfurt, the DAX also opened down 1% and the CAC 40 in Paris is down 0.9%.

Play quizzes 4

Get the full Ray Dalio series in PDF

Get the complete 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email it to co-workers

First Quarter 2022 Hedge Fund Letters, Talks and More

Lauren Taylor Wolfe of Impact Capital presents a thesis for Wex at the Sohn Investment Conference

payment 1654887265It’s nearly impossible to read an article about investing that doesn’t mention inflation. Investors would do well to look for companies that will benefit from an inflationary environment, and one sector that should benefit is payment processing and credit card companies. At the Sohn Investment Conference, Lauren Taylor Wolfe of the activist hedge fund Impactive Read More

All eyes are firmly on the US Consumer Price Index release, which is due later, and it is anticipation of the bleak scenario this data is meant to reveal that is at the forefront. origin of this new leap of anxiety. Prices are expected to post an 8.3% year-on-year increase, the highest in nearly 40 years, and the Federal Reserve is expected to have to pull the reins harder to slow it down. Signs that prices climbed even higher last month should spark another round of selling, but a weaker-than-expected reading could trigger a wave of buying that caps off a volatile week for stocks.

The European Central Bank’s decision to raise interest rates in July for the first time in 11 years yesterday was another jolt for financial markets and is another sign that the trip of cheap money is pulling sharply to its end. It came on the heels of bigger-than-expected rate hikes from the Reserve Banks of India and Australia this week, once again shining the spotlight on the struggle to contain rising prices for consumers and businesses. .

The tech sellout continues

The tech sell-off continues, pushing Scottish Mortgage Investment Trust more than 2.4% lower in early trade, making it the biggest loser on the FTSE 100. It has many big tech names in its stables such as Nvidia, Amazon and Tesla all tumbled as concerns over future interest rate moves by the Federal Reserve grow.

Soaring oil prices are expected to be a major driver of higher prices in the US inflation report for May, and although the benchmark Brent Crude index has eased from its early week highs, the price is still holding above $122 a barrel. China’s coronavirus problem doesn’t seem to be going away any time soon, with a new district lockdown now in effect in Shanghai. This is causing a ripple of demand uncertainty in China’s economy, which is likely to remain given Beijing’s zero-Covid stance that has disabled parts of the economy as authorities attempt to eradicate the virus. »


About Hargreaves Lansdown

Over 1.7m clients trust us with £132.2bn (as of April 30, 2022), making us the UK’s leading platform for private investors. Over 98% of customer activity occurs through our digital channels and over 600,000 access our mobile app each month.

Updated