London: World equities tanked Thursday as slowing US inflation failed to dent fears of rising global interest rates and sent oil prices diving on demand concerns.
The European single Currency sank to a January 2017 low at $1.0422 as the greenback was lifted by its haven status.
Frankfurt, London and Paris stock markets each sank more than two percent in midday deals after heavy falls in Asia and on Wednesday in the United States.
Panic-stricken investors also sent virtual unit bitcoin tumbling to the lowest level since late 2020 after a dramatic collapse in some stablecoin cryptocurrencies.
US inflation slowed to 8.3 percent in April after a four-decade peak of 8.5 percent in March, data showed overnight.
– ‘Another cruel blow’ – “While it will come as a relief that (US) inflation has finally peaked and the deceleration has started, the fact that it didn’t do so nearly as much as expected is just another cruel blow to households and the economy,” Oanda analyst Craig Erlam told AFP.
“Central banks are going to have to do more if (inflation) data does not drastically improve in the next few months.” Investors had hoped the US consumer price data would lower pressure on the Federal Reserve to hike borrowing costs.
However April’s reading eclipsed market expectations of 8.1-percent inflation.
Interest rates are being hiked worldwide to tackle decades-high inflation, which is fuelled mostly by rocketing energy costs.
London’s stock market was slammed Thursday also by news that the UK economy shrank in March on fallout from soaring inflation, increasing the prospect of a recession — or two quarters of contraction in a row.
The data sent the pound sliding to a May 2020 low at $1.2166.
World markets have been volatile for much of 2022 owing to China’s Covid-19 lockdowns, Russia’s invasion of Ukraine, and as surging inflation weighed on consumer sentiment.