FTSE 100 Falls to Lowest Closing Level in 2023 as Interest Rate Fears Grip Markets

THE GUARDIAN: Markets suffer on both sides of Atlantic as Fed signals more rate hikes and recession fears grow in UK

Global financial markets fell sharply on Thursday as investors braced for central banks driving interest rates up further to combat high inflation across the world’s leading economies.

Share prices fell on both sides of the Atlantic with the FTSE 100 tumbling by 161 points, or 2.2%, to finish the day at 7,280 – its lowest level since last November – while stocks fell by a similar amount across Europe and by more than 1% in New York.

UK government borrowing costs rose further, extending an increase seen in recent weeks amid concern that the Bank of England may need to engineer the conditions for a recession in order to squeeze high inflation out of the British economy. » | Richard Partington, Economics correspondent | Thursday, July 6, 2023

Stock Markets Plunge again as Flurry of Interest Rate Hikes Fuels Recession Fears

THE GUARDIAN: Investors wary as other central banks follow US Federal Reserve in raising borrowing costs

The global rout in stock markets, cryptocurrencies and other risky assets has gathered pace amid growing concern that out-of-control inflation, rising interest rates and slowing growth could combine to tip the world into recession.

Share prices fell in Asia on Friday at the beginning of what was likely to be another torrid day for investors spooked by the US Federal Reserve’s decision this week to raise interest rates by the largest margin for almost 30 years.

Other leading central banks such as the Bank of England and the Swiss National Bank have followed suit – the latter in its first hike for 15 years – sending economists scrambling to revise their forecast for growth downwards.

Stephen Innes at SPI Asset Management in Hong Kong said: “No central bankers worth their weight would put inflation-fighting credentials on the line and import higher energy inflation via a weaker currency. » | Martin Farrer | Friday, June 17, 2022

Global Stock Sell-Off Continues as Economic Concerns Mount

THE NEW YORK TIMES: The losses in China, Japan and Australia followed weakness in the United States, where stocks closed in bear market territory.

The sell-off in stocks continued across the Asia-Pacific region on Tuesday as fears mounted of a recession in the United States and a slowdown in the global economy.

Japan’s Nikkei index fell 1.7 percent in afternoon trading, while China’s Shanghai Composite Index was off 0.5 percent. In Australia, the key stock index tumbled about 4 percent, to its lowest levels in two years.

The market declines followed weakness in the United States, where stocks lost 3.9 percent on Monday to close in bear market territory. After reaching a record high in January, the S&P 500 has fallen more than 20 percent, the seventh bear market in the last 50 years. » | Daisuke Wakabayashi | Tuesday, June 14, 2022

Bear Market Sends Grim Signal of Economic Fears »

The Fed May Discuss the Biggest Interest Rate Increase Since 1994 »

Wall St. Tumbles as Global Sell-off Accelerates.

Screenshot: The New York Times
THE NEW YORK TIMES: U.S. stocks opened in bear market territory on Monday, a 20 percent decline from their peak in January, a sign of growing pessimism about the outlook for the economy.

Markets around the world tumbled, as higher-than-expected inflation and lower-than-expected economic growth upend the outlook for interest rates and corporate profits. Stocks in Asia and Europe fell, investors dumped government bonds, oil prices slipped and cryptocurrencies crashed.

The S&P 500 fell 2.5 percent at the open of trading, as a wave of selling continued. The S&P 500 briefly dipped into bear market territory last month, before recovering to close just above it. The markets have been jittery since, with the S&P 500 last week recording its worst weekly loss since January.

The benchmark U.S. stock index is now “within one bad day’s move of a bear market, and equity futures suggest that we haven’t seen all the negative sentiment expressed yet,” analysts at ING wrote in a note to investors on Monday morning. The S&P 500 has fallen in nine of the past 10 weeks.

A report on Friday showed a surge in inflation in the United States, which rattled markets, as investors worried that the Federal Reserve may have to raise interest rates higher and faster than expected to rein in rising prices, a move that could hit the U.S. economy.

Global investors sold stocks, bonds and other assets, as inflation is running high in many countries, supply chains remain snarled and forecasts for economic growth are being downgraded. » | Alexandra Stevenson and Jason Karaian | Monday, June 13, 2022

What you should know about bear markets: There have been several instances of near-bear markets in recent decades, but it’s rare for them to hit the threshold »

Wall Street chute, inquiète de l’inflation et de la perspective d’une hausse des taux : La Bourse de New York est entrée dans un marché baissier, avec un recul supérieur à 20 % pour le S&P 500 et de 30 % pour le Nasdaq depuis le début de l’année. Lundi, en début de matinée, les deux indices perdaient respectivement 4,15 % et 3,6 %. »

Angst vor schneller steigenden Leitzinsen – Dax fällt auf weniger als 13.500 Punkte: Nachdem die Inflation in Amerika sogar noch einmal gestiegen ist auf deutlich mehr als 8 Prozent, rückt die mächtigste Notenbank der Welt wieder ins Visier der Börse: Straffen die Währungshüter mehr als gedacht? Die Anleger reagieren schon. »

European Shares Tumble, Commodity Prices Soar

THE GUARDIAN: European shares are sliding deeper into the red, after Russian shelling at a Ukrainian nuclear plant – Europe’s shares, commodity prices, biggest nuclear power station – led to a fire that burned for several hours, before being extinguished. The reactors are fine, according to the Ukrainian authorities, but this illustrates the dangers to a nuclear plant in a military conflict and has caused deep unease at the International Atomic Energy Agency. » | Julia Kollewe | Friday, March 4, 2022

Prospect of Soaring Interest Rates Sends Markets into Frenzy

THE TIMES: Volatility is back. Some of the world’s stock markets are oscillating violently, none more so than Wall Street. On Monday, Tuesday and Wednesday this week, the Dow Jones industrial average experienced intra-day swings of 1,271 points, 1,046 points and 939 points, respectively — huge movements by any normal measure.

While the trend in share prices has been sharply down since New Year’s Day, it is the erratic and wildly fluctuating nature of stock markets that has really caught the eye. » | Patrick Hosking, Financial Editor | Saturday, January 29, 2022

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Markets Plunge Again as Ukraine Stand-off Rattles Investors

THE TIMES: Global stock markets, coming off their worst week in almost two years, fell sharply again today as investors pulled their money out of risky assets amid continued tensions between Russia and Ukraine and the prospect of interest rate rises in the United States.

With investors losing their appetite for risk, the sell-off spread to wider assets including oil and cryptocurrencies. Sterling, too, was out of favour.

In late-afternoon trading the FTSE 100, London’s blue-chip index, was down 172.66 points, or 2.3 per cent, at 7,321.47. It was on course for its biggest one-day fall since the end of November, when the Omicron variant first rattled investors.

The index has fallen in each of the past three sessions and given up all of the gains it … » | Tom Howard | Monday, January 24, 2022 [£] *

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Global Markets Swoon as Worries Mount over Superpowers’ Plans

THE NEW YORK TIMES: The S&P 500 closed down 1.7 percent over a number of jitters, like China’s sputtering real estate market and the phasing out of stimulus measures in the United States.

Investors on three continents dumped stocks on Monday, fretting that the governments of the world’s two largest economies — China and the United States — would act in ways that could undercut the nascent global economic recovery.

The Chinese government’s reluctance to step in and save a highly indebted property developer just days before a big interest payment is due signaled to investors that Beijing might break with its longstanding policy of bailing out its homegrown stars.

And in the United States, the globe’s No. 1 economy, investors worried that the Federal Reserve would soon begin cutting back its huge purchases of government bonds, which had helped drive stocks to a series of record highs since the coronavirus pandemic hit.

The sell-off started in Asia and spread to Europe — where exporters to China were slammed — before landing in the United States, where stocks appeared to be heading for their worst performance of the year before a rally at the end of the trading day. The S&P 500 closed down 1.7 percent, its worst daily performance since mid-May, after being down as much as 2.9 percent in the afternoon.

The catalyst for the swoon was the continued turmoil at China Evergrande Group, one of that country’s top three developers of residential properties. The company has an estimated $300 billion in debt, and an interest payment of more than $80 million is due this week. » | Matt Phillips, Eshe Nelson and Coral Murphy Marcos | Monday, September 20, 2021

Markets Stage One of Worst Christmas Eves Ever, Closing Down More Than 600 Points as Trump Blames Fed for Stock Losses in a Tweet

THE WASHINGTON POST: The Dow Jones industrial average followed its worst week in a decade with a 653-point drop Monday, and President Trump once again took to Twitter to interject himself into financial markets.

As blue chips sank even deeper into the red after weeks of chaos, Trump tried to assign sole blame for the sell-off to the Federal Reserve, likening the central bank to a golfer who “can’t putt.”

“The only problem our economy has is the Fed,” the president said in a tweet. “They don’t have a feel for the Market, they don’t understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders. The Fed is like a powerful golfer who can’t score because he has no touch — he can’t putt! » | Thomas Heath & Philip Rucker | Monday, December 24, 2018

Is It Contagious? Italy Crisis Spooks Europe, Markets

A technocrat interim prime minister who may never form a government. Will the Italian president call early elections or try again to cut a deal with an unprecedented populist coalition. Will a founding member of the EU be led by euro skeptics? With no clarity on the horizon, the now-steadied European markets may falter. Why is the backlash against traditional politics still growing, with new parties blowing up the old left vs right divide? When the dust settles, what will Europe look like?

Russian Markets Hit as Putin Tightens Grip on Crimea

REUTERS.COM: (Reuters) - Russia took a financial hit over its military intervention in neighboring Ukraine, with its markets and currency plunging on Monday as President Vladimir Putin's forces tightened their grip on the Russian-speaking Crimea region.

The Moscow stock market fell by 10 percent and the central bank spent $10 billion of its reserves to prop up the rouble as investors took fright at escalating tensions with the West over the former Soviet republic.

Ukraine said Russia was building up armoured vehicles on its side of a narrow stretch of water closest to Crimea after Putin declared at the weekend he had the right to invade his neighbor to protect Russian interests and citizens.

On the ground in Perevalnoye, half way between the Crimean capital of Simferopol and the Black Sea, hundreds of Russian troops in trucks and armoured vehicles - without national insignia on their uniforms - surrounded two military compounds, confining Ukrainian soldiers as virtual prisoners.

Ukraine called up reservists on Sunday and the United States threatened to isolate Russia economically after Putin's action provoked what Britain's foreign minister called "the biggest crisis in Europe in the twenty-first century". » | Lidia Kelly and Alissa de Carbonnel | Moscow/Perevalnoye, Ukrain | Monday, March 03, 2014

Syrian TurmOil: War Panic Sends Black Gold Prices to 2-year High

Washington and London's push for military intervention has taken its toll on the financial world. The threats have spurred oil and gold prices - while investors have rushed to pull their money from stock markets. RT's Katie Pilbeam looks at how the rhetoric has affected the world economy.

Euro Crisis Goes Global as Leaders Fail to Stop the Rot
THE GUARDIAN: G7 demands action from Europe after markets plunge / Fears that banks' exposure to debt could wreck recovery

Germany's Angela Merkel and other European leaders is [sic] under increasing pressure over the Greek debt crisis going global as markets were in turmoil. Photograph: The Guardian
The growing crisis in the eurozone threatened to undermine the global economic recovery as markets plunged across the world on fears that European leaders may not be able to contain the debt contagion spreading from Greece.

Stock markets in London, New York, and Shanghai dived following criticism that much delayed and half-hearted measures to rescue Greece were undermining confidence in wider efforts to kick start the world economy.

European shares finished the day at a six-month low while the Dow was down around 1% at 10,424. In Asia, the Shanghai stock market fell to an eight-month low of 2688, down 6.8% on the previous day.

An emergency summit of the 16 leaders of the countries using the single currency was held in Brussels , with Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France demanding tougher and quicker regulation of the financial markets in what looked like a doomed attempt to contain contagion from the Greek drama.

One factor being discussed last night was to persuade the ECB to launch a new quantitative easing policy – entailing huge loans to distressed governments in the form of buying up their bonds. This is supported by the European Commission, Spain, Portugal, Italy and France, but is certain to run into German opposition.

With the pace of developments outstripping the ability of political leaders to respond, what was initially called as a summit to bless a €110bn (£95bn) rescue package for Greece turned into a frantic exercise in global crisis management.

Alarm bells were ringing in major capitals across the world where leaders voiced their exasperation with European attempts to contain the fallout from Greece. >>> Phillip Inman and Ian Traynor in Brussels | Friday, May 07, 2010

Spain Downgrade Sparks European Sell-off
TIMES ONLINE: Spain's debt has been downgraded in a further widening of Europe’s government debt crisis.

The move follows its reductions yesterday of Portugal and Greece, which sent shock waves through world markets.

Standard & Poor’s said its decision to downgrade Spain’s credit rating by one notch to AA from AA+ is due to its expectation that the country will suffer an “extended" period of subdued economic growth.

“We now believe that the Spanish economy’s shift away from credit-fueled economic growth is likely to result in a more protracted period of sluggish activity than we previously assumed,” S&P credit analyst Marko Mrsnik said.

The euro dived to another one-year dollar low of $1.3129 following the announcement, reaching a level last seen in late April 2009.

The FTSE 100 index, which had largely recovered its losses by early afternoon as fears about Greece's debt contagion eased, fell 16.91 points or 0.3 per cent to 5,586.61. Germany’s DAX and France’s CAC 40 fell between 0.3 and 1.5 per cent. Spain’s IBEX index fell 3 per cent and Portugal’s PSI 20 was down 1.9 per cent.

Earlier today the European Commission called on credit rating agencies to act responsibly after Standard & Poor’s downgraded Greece’s debt to junk status, sparking a widespread sell-off across world markets. Read on (+ video) >>> Emily Ford, Carl Mortished, David Wighton | Wednesday, April 28, 2010

Crisis Spreads in Europe: Debt Downgrades in Portugal, Greece Sow Fear of Contagion; World Markets Hit
THE WALL STREET JOURNAL: Europe's hopes of containing Greece's credit crisis dimmed as the country's debt woes spread to Portugal, sparking a selloff in markets across the globe and testing the European Union's ability to protect its common currency.

The euro tumbled to its lowest point in a year against the dollar after Standard & Poor's Ratings Services cut Portugal's credit rating two notches and downgraded Greece's debt to "junk" territory, a first for a euro-zone member. The move is bound to worsen Greece's already dire fiscal situation and hamper a recovery. The news sent the bond yields in both countries soaring, a sign of distress.

The Dow Jones Industrial Average fell 213.04 points, or 1.9%, to 10991.99, suffering its worst decline in both point and percentage terms since Feb. 4. The pan-European Stoxx Europe 600 index tumbled 3.1%. As investors opted for the safety of bonds, the yield on Germany's 10-year benchmark was pushed down to 2.99%, moving below 3% for the first time in more than a year. Yields on U.S. Treasurys also dropped as investors bought.

Asian stock markets tumbled in early trading Wednesday on renewed worries about Greece's problems, with Japan's Nikkei 225 stock average shedding 2.8%.

The force of the market reaction to the downgrades suggests that the EU's fraught, months-long effort to stem Greece's debt crisis has all but failed. Portugal's stagnant economy has been viewed as among the weakest in the euro zone, although its deficit and debt levels aren't as high as Greece's. The debt rating downgrade on Tuesday, to A-minus from A-plus, fueled concerns that Portugal is on the same trajectory as its southern neighbor, despite its more solid fiscal position.

Greece's own turmoil was triggered in part by a similar ratings downgrade in December amid growing concerns about its debt. >>> Matthew Karnitschnig, Stephen Fidler and Tom Lauricella | Tuesday, April 27, 2010



TIMES ONLINE: ‘Greece infection’ spreads as stricken nation’s debt is rated junk: Greece plunged deeper into financial turmoil last night after its government bonds were rated as junk by financial markets. The Portuguese government debt also took a hammering after panic spread that a Mediterranean virus of insolvency and bad debts would infect the rest of Europe. >>> Carl Mortished and David Wighton | Wednesday, April 28, 2010

THE TELEGRAPH: Greece acts to stop speculators as debt crisis escalates: Greece has moved to stem panic in the country and stop speculators taking advantage of its escalating debt crisis. >>> Malcolm Moore in Shanghai | Wednesday, April 28, 2010

Global Sell-off Shudders Markets as Euro Plunges to Eight-month Low Amid Fears of Debt Default
MAIL ONLINE: The euro fell for a second straight day today amid fears that economies of Portugal, Greece and Spain could collapse in a sea of debt.

In Europe, the FTSE 100 index of leading British shares was down 1.6 per cent, while Germany's DAX fell 1.3 per cent and the CAC-40 in France was 2.1 per cent lower.

The euro tumbled below $1.37, its lowest level since May 2009.

It also slumped against other safe-haven currencies like the Swiss franc, forcing the Swiss National Bank to take the unusual step of intervening in the market.

But the currency remained steady against sterling, reflecting the weakness of the British economy. >>> Lucy Farndon and Heath Aston | Friday, February 05, 2010

Nouveau décrochage de l'euro face au dollar
LE FIGARO: Face aux détériorations des finances publiques de plusieurs états de la zone euro, la monnaie européenne est passée à 1,3648 dollar ce vendredi matin.

L'euro est tombé vendredi à son niveau le plus bas depuis mai 2009. Ce matin, la monnaie unique enchaîne sa troisième séance de repli et est passé sous les 1,37 dollar, après avoir franchi en baisse le seuil des 1,38 dollar la veille (jeudi soir vers 22 heures). Il a atteint 1,3648 dollar vers 9 heures 30. C'est un niveau inédit pour la monnaie unique depuis le 9 mai.

Depuis le début de l'année, l'euro a cédé 2,5%.

Cette chute s'explique en particulier par l'inquiétude des cambistes due aux difficultés budgétaires de plusieurs pays de la zone euro. Beaucoup s'attendent à une intervention musclée de l'Europe, voire à un appel auprès du Fonds monétaire international (FMI), pour aider la Grèce à se sortir d'une crise budgétaire sans précédent.

Un autre sujet vient inquiéter l'euro sur le marché des devises, le cas de l'Espagne qui a très mal digéré la crise avec notamment un taux de chômage atteignant près de 20%. D'ailleurs Dominique Strauss-Kahn, le patron du FMI, a parlé ce jeudi sur RTL d'une crise «très forte en Espagne» et que le pays devait faire «un effort considérable» pour réduire les déficits publics. La dette publique espagnole s'est envolée un peu au-dessus des 60% du PIB en 2010 alors qu'en 2007 elle ne représentait que 36,2% du PIB. >>> Jean-Guillaume Brasseur (lefigaro.fr) | Vendredi 05 Février 2010

More Falls in US Stocks
BBC: Stock markets in the US have fallen sharply as the cumulative effect of a weak dollar, soaring oil prices and the credit crisis again eroded confidence.

The benchmark Dow Jones index of leading shares tumbled 360.92 points, or 2.6%, on a day of fresh volatility.

Banking stocks were widely sold as fears over financial problems facing Wall Street showed no signs of abating.

Morgan Stanley said exposure to bad sub-prime related investments had reduced its profits by $2.5bn ($1.2bn).

Sub-prime liabilities on its balance sheet totalled $6bn at the end of last month while the decline in value of these assets had wiped $3.7bn off sales in the past two months.

"It is expected that market conditions will continue to evolve and that the fair value of these exposures will frequently change and could further deteriorate," Morgan Stanley warned in a statement after the stock market had closed. Economic worries knock US markets (more)

Mark Alexander

100 Years After
Photo of J P Morgan courtesy of the BBC
BBC: Almost exactly 100 years ago at 4.45 in the morning of a November day on the corner of Madison and 35th Street in New York a group of some 50 or so exhausted men stumbled out into the street.

Some had not slept for days.

Behind them, on the other side of the monumental brass doors that closed behind them, they left a piece of paper which pledged them collectively to a loan of some $25m - about $10bn (£5bn) in today's money.

Beside it stood a large gentleman with a walrus moustache, who had forced them into the deal which ended a two-week financial panic that had come close to destroying New York's financial system. That man was J Pierpont Morgan.

From 1903 to 1906 the global economy had boomed and the Dow Jones had doubled.

But the global supply of gold to which all hard currency was pegged had not kept pace, and hard cash was increasingly scarce.

A hundred years later our credit squeeze had its genesis in the infamous sub-prime mortgage market of the US. 100 years after the 1907 credit crunch (more) By Jamie Robertson

Financial crises: Lessons from history By Steve Schifferes

Mark Alexander

Is Another Black Day on Wall Street on the Cards?
THE TELEGRAPH: The triggers for 1987's Black Monday – when Wall Street fell 22.6pc in a single day – are back, writes Ambrose Evans-Pritchard

Exactly 20 years after "Black Monday" – which saw Wall Street plunge 22.6pc – economists have warned of eerie parallels with the tensions visible on global markets today.

Simon Derrick, chief currency strategist at the Bank of New York Mellon, says the collapse of the US dollar in the mid-1980s lay behind the ructions that led to Black Monday – modern times' most dramatic one-day crash. The dollar had been sliding relentlessly for two years and was at risk of breaking down in a disorderly rout, much like today.

"The dollar was under severe pressure in October 1987. Interest rates were on the rise globally, the US trade deficit remained high and energy prices had been increasing on the back of tension in the Gulf," he said. These conditions are more or less in place once again.

The price of crude oil reached an all-time high of $84 a barrel last week on news of dwindling stockpiles, while US inflation has yet to subside. The producer price index surged in September –now up 4.4pc on last year.

The dollar has fallen below parity against the Canadian dollar for the first time since 1976. The global dollar index has dropped 9pc over the last year, touching an all-time lows of 77.66.

Jim Baker, the former US Treasury Secretary, said Black Monday's trigger was an interest rate rise by Germany's Bundesbank, forcing the whole European system to raise in lockstep.

The move sparked fears that the US Federal Reserve would have to match with tightening of its own, or risk a further dollar slide and the start of an inflationary spiral. The Fed found itself hemmed in by world forces.

Economists' concern this time is that Asian and Middle East central banks and investment funds are losing their taste for US investments. This could knock away a key prop for the dollar. There is already evidence that Korea, Singapore, Taiwan, Vietnam and Qatar are drawing back. Europe is less likely to prove a trigger today. Even so, European Central Bank governors recently warned that inflation risks are rising, hinting at another rate rise. Is another Wall St crash coming? (more)

Mark Alexander

Financial Crises: From 1929 to the Present Day
BBC: The current market jitters are centred on disturbances in the world's credit markets. Worries about the viability of sub-prime mortgage lending have spread around the financial system, and the central banks have been forced to pump in billions of dollars to oil the wheels of lending.

But what happened in previous financial crises, and what are the lessons for today?

There have been a growing number of financial crises in the world, according to the International Monetary Fund (IMF).
Among the key lessons of previous major financial crises are:

• Globalisation has increased the frequency and spread of financial crises, but not necessarily their severity

• Early intervention by central banks is more effective in limiting their spread than later moves

• It is difficult to tell at the time whether a financial crisis will have broader economic consequences

• Regulators often cannot keep up with the pace of financial innovation that may trigger a crisis.

Financial Crises: Lessons from History By Steve Schifferes

THE TELEGRAPH:
Shares fall as US house prices in record nosedive By David Litterick, New York

Subprime Crisis

Business Comment: US housing crash reminds us we're due a correction By Richard Fletcher

Mark Alexander