Global stock markets slump amid inflation concerns

·3-min read
Workers walk towards Tower Bridge, London
In London, the FTSE 100 was trading flat after opening, while the CAC tumbled 0.2% in Paris, and the DAX was almost 0.1% higher. Photo: Toby Melville/Reuters

European stock markets closed in the red on Tuesday, after what was a mixed session, while Wall Street faltered after the bell in New York amid inflation concerns.

In London, the FTSE 100 (^FTSE) finished 0.4% down, while the CAC (^FCHI) ended flat, and the German DAX (^GDAXI) was 0.1% lower.

It came as the latest sales monitor from the British Retail Consortium (BRC) and KPMG showed sales growth picked up pace in October, despite a hit to consumer electronics from supply chain issues and chip shortages.

Total retail sales rose 1.3% year-on-year last month, following a 0.6% rise in September. The decline in like-for-like sales eased to 0.2% from 0.6% the previous month.

“Customer demand is getting back on track ahead of Christmas as sales grew at a faster rate than the month prior, and well above its pre-pandemic levels,” said Helen Dickinson, chief executive of BRC.

“As social calendars started filling up with festivities, clothing and footwear sales performed well.”

Meanwhile, the latest data from the Office for National Statistics (ONS) revealed that the number of employees in central London's local authority of Westminster tumbled by 32,500. 

London as a whole saw the largest number of job losses across the UK, with employee numbers down by 130,600, a fall of 2.5%.

Read more: UK grocery inflation at 14-month high as snacks see price hike

Across the pond, the S&P 500 (^GSPC) was down 0.5% at the time of the European close, and the tech-heavy Nasdaq (^IXIC) also fell 0.5%. The Dow Jones (^DJI) tumbled 0.6% on the day.

It came as US producer prices climbed last month amid higher goods costs, fuelling fears about inflationary pressures in the economy.

The producer price index rose 0.6% in October compared to the previous month and 8.6% from a year earlier, Labour Department said. The annual rise is the largest in more than a decade.

Excluding the volatile food and energy components, the so-called core PPI rose 0.4% and was up 6.8% from a year ago.

Read more: Bitcoin price flirts with all-time high as inflation threatens

On Monday, the S&P 500 and Nasdaq extended their run of all-time closing highs to eight straight sessions as investors continued to shrug off concerns about rising inflation, supply chain problems, and the COVID-19 pandemic.

This is the longest all-time high streak to start any month since six consecutive highs in January 2018. Only once in history has a month started off with seven consecutive all-time highs in July 1964. The Dow also notched its second consecutive record closing high.

It came as the passage of a US infrastructure bill boosted sentiment, while oil prices gained on the outlook for energy demand in an expansive global economy.

Watch: Infrastructure gains drive Wall Street higher

Elsewhere, the US Federal Reserve warned in its latest financial stability report that prices of risky assets were becoming vulnerable to significant declines.

Asian shares were mixed overnight. In Japan, the Nikkei (^N225) fell 0.8% as wages grew 0.2% year-on-year in September, compared to a 0.6% consensus, and real wages fell 0.6% as prices rose faster.

The Hang Seng (^HSI) in Hong Kong was 0.2% higher, and the Shanghai Composite (000001.SS) also rose 0.2% on the day.

Watch: What is inflation and why is it important?

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