Global markets slide on inflation and growth concerns

·2-min read
U.S. Federal Reserve Chair Jerome Powell
US Federal Reserve chair Jerome Powell. Photo: Jonathan Ernst/Reuters

European markets closed into the red on Friday after weak UK retail sales fuelled concerns about slowing economic growth.

Across the pond, US stocks were lower after the latest sign that the Federal Reserve will tighten monetary policy aggressively to fight inflation.

The S&P 500 (^GSPC) was down 1.1% to 4,341 points and the tech-heavy Nasdaq (^IXIC) retreated 0.7%. The Dow Jones (^DJI) dropped 1.4% as trading closed in Europe.

In London, the FTSE 100 (^FTSE) fell 1.1% as markets closed, while the CAC (^FCHI) tumbled 1.8% in Paris and the Frankfurt DAX (^GDAXI) finished 2.1% lower.

It came as the latest figures from the Office for National Statistics (ONS) showed that retail sales slumped 1.4% in March amid a sharp cost of living crisis in the country, trailing behind the 0.3% decline economists were expecting.

The fall was led by sales of food, clothing and footwear, as well as fuel. Online sales also declined during the month due to lower levels of discretionary spending.

Meanwhile, a survey from GfK showed consumer confidence fell in April for the fifth straight month to -38. This reading was the lowest since the height of the financial crisis in 2008.

Joe Staton, GfK's client strategy director, said: "This is dire news for consumer confidence and with little prospect of any economic relief on the horizon we can only forecast further falls in the index for the year ahead”.

Read more: Cost of living crisis: How consumers are cutting spending

“Further hawkish comments from the Federal Reserve Chair put another cat among the pigeons in a day of violent swings,” Richard Hunter, head of markets at Interactive Investor, said,

“The main US indices had opened strongly, buoyed by jobless numbers at their lowest level in over 50 years, while upbeat earnings also prompted some buying interest in a reporting season which, for the most part, has so far seen companies beating earnings expectations."

Watch: Wall Street drops as Powell backs aggressive rate hike

He added: “However, volatility is close at hand at present given the inflationary backdrop, and the 700 point swing in the Dow over the course of the day was ample proof of the current fragility of sentiment.

“The lurch lower leaves each of the main indices further in the red for the year, with the Dow having now lost 4.3%, the S&P500 7.8% and the Nasdaq 15.8%.”

Asian markets were mostly lower on Friday, taking their lead from Wall Street after the US Federal Reserve boss said an interest-rate hike was likely forthcoming.

In Japan, the Nikkei (^N225) fell 1.6% on the day while the Hang Seng (^HSI) fell 0.2% in Hong Kong. The Shanghai Composite (000001.SS) managed to buck the trend, rising 0.2% higher.

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