World equities mostly fell Thursday, and the euro hit a five-year dollar low as investors worried about growth amid stubborn inflation and rising interest rates.
Frankfurt, London and Paris stock markets each sank following heavy falls in Asia.
Wall Street was mixed after another day of volatile trading, with the Dow falling for the sixth straight session but the Nasdaq mustering a small gain.
Panic-stricken investors also sent virtual unit bitcoin tumbling to the lowest level since late 2020 after a dramatic collapse in some stablecoin cryptocurrencies.
Oil prices were mixed as investors weighed worries about Russian oil supply against concerns about sagging demand.
‘Sticky inflation’ worries
On Wall Street, another rocky round of trading concluded with two of the three indices in the red, as data on wholesale prices showed that price increases eased in April compared with the prior month but still were 11 percent higher than a year ago.
Meanwhile, analysts expressed alarm over Moscow’s combative response to Finland’s efforts to join NATO in the wake of Russia’s invasion of Ukraine.
“Helsinki should be aware of its responsibility and the consequences of such a move,” Russia’s foreign ministry said.
The dollar has gotten a boost, both as the greenback is seen as a haven in uncertain times and as the US Federal Reserve has taken the lead in raising interest rates in the face of surging inflation.
The dollar is currently at a two-decade high against a trade-weighted index of rival currencies, and on Thursday, the euro slumped to a five-year dollar low under $1.04.
“Given the combination of a relatively hawkish monetary policy stance and a dollar-positive global backdrop, we expect the dollar to grind higher against nearly all developed and emerging market currencies over the course of the Fed’s current tightening cycle,” said analysts at Capital Economics.
Interest rates are being hiked worldwide to tackle decades-high inflation, which is fueled mostly by rocketing energy costs.
Both rising prices and borrowing costs threaten to halt growth in many countries, however.
London’s stock market was also slammed Thursday 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 low of $1.2166, last seen in May 2020.
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.
Cryptocurrency trading has also been dampening investor sentiment after two so-called stablecoins proved to be anything but. Supposedly pegged to the dollar, both TerraUSD and Tether saw the values collapse.
“The worry is that there will be a spillover to other risk assets like stocks, which could be treated as a source of funds to meet margin calls or which could simply be subjected to an exacerbation of the negative sentiment that has had a vice grip on the market for most of the year,” said market analyst Patrick O’Hare at Briefing.com.
Bitcoin slumped below $27,000 before recovering a bit, trading recently at $28,710.
Key figures at around 2050 GMT
New York – Dow: DOWN 0.3 percent at 31,730.30 (close)
New York – S&P 500: DOWN 0.1 percent at 3,930.08 (close)
New York – Nasdaq: UP 0.1 percent at 11,370.96 (close)
London – FTSE 100: DOWN 1.6 percent at 7,233.34 (close)
Frankfurt – DAX: DOWN 0.6 percent at 13,739.64 (close)
Paris – CAC 40: DOWN 1.0 percent at 6,206.26 (close)
EURO STOXX 50: DOWN 0.9 percent at 3,613.43 (close)
Hong Kong – Hang Seng Index: DOWN 2.2 percent at 19,380.34 (close)
Shanghai – Composite: DOWN 0.1 percent at 3,054.99 (close)
Tokyo – Nikkei 225: DOWN 1.8 percent at 25,748.72 (close)
Brent North Sea crude: DOWN 0.1 percent at $107.45 per barrel
West Texas Intermediate: UP 0.4 percent at $106.13 per barrel
Euro/dollar: DOWN at $1.0382 from $1.0513 at 2100 GMT Wednesday
Pound/dollar: DOWN at $1.2199 from $1.2251
Euro/pound: DOWN at 85.08 pence from 85.81 pence
Dollar/yen: DOWN at 128.36 yen from 129.97 yen
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