Equity  

Stock markets slump over recession fears

Stock markets slump over recession fears
Trader Patrick King works the floor at the New York Stock Exchange (AP Photo/John Minchillo)

Developed equity markets crashed today (May 19) after high inflation and poor corporate earnings stoked fears of an incoming recession.

The FTSE 100 slumped 2 per cent in trading today, the CAC 40 dropped 1.5 per cent and the Dax stuttered down 1.1 per cent.

Asian markets also suffered falls, with the Nikkei dropping 1.9 per cent and the Hang Seng Index crashing 2.5 per cent.

The news follows inflation hitting a 40-year high in the UK, announced yesterday (May 18), alongside poor results from US retailers Target and Walmart, and wider fears of central banks’ plans to hike interest rates and unwind quantitative easing.

UK inflation hit 9 per cent in the year to April 30, with analysts calling it the "worst inflation crisis seen in a lifetime".

The Bank of England and Federal Reserve have both embarked on a succession of interest rate rises in an attempt to subdue the soaring price rises.

US markets saw drops, with the S&P 500 falling 0.8 per cent and the Dow Jones down 1.2 per cent.

Long-term US bond prices also rose in trading today, reflecting a flight to safety. The 10-year Treasury yield benchmark was down 0.1 percentage points, and the German 10-year bond yield also fell back, to below 1 per cent.

sally.hickey@ft.com