Business

Stocks diverge, oil extends losses

Written by The Frontier Post

LONDON (AFP/APP): European stock markets rebounded Tuesday, Asian equities mostly sank and oil prices tumbled as traders reacted to fears over rising US interest rates fuelled by surging inflation and assessed the impact of China’s prolonged Covid lockdowns.
World stock markets have been on a tempestuous ride this year, with Wall Street suffering another hit on Monday as the tech-rich Nasdaq slumped more than four percent, while the S&P 500 ended below 4,000 points for the first time since March 2021.
That followed hefty declines Monday in Europe, although key indices in Frankfurt, London and Paris had recovered some of those losses by the half-way stage Tuesday.
“After yet another miserable session in the US yesterday, Europe and pockets of Asia managed to… push ahead,” noted Russ Mould, investment director at AJ Bell.
Investors were worried “about inflation, rising interest rates, a slowdown in the world economy, war in Ukraine, new Covid flare-ups in China, weakness in consumer spending and concerns that business investment might take a back seat”, he added.
Bitcoin woes
Bitcoin on Tuesday slumped briefly under $30,000, reaching a 10-month low.
The volatile cryptocurrency has lost more than half its value since a November surge saw it reach a record-high of nearly $69,000.
While crypto enthusiasts view bitcoin as a hedge against inflation, an influx of more traditional investors tend to view it as a riskier asset.
They have been offloading bitcoin and other digital tokens along with other volatile assets like tech stocks as the US Federal Reserve moves to hike interest rates to tackle decades-high inflation.
Data on Tuesday showed inflation in Greece jumping by 10.2 percent in April, its highest level since 1995, while it reached its highest rate since 1984 in Denmark at 6.7 percent.
Inflation began to rise after countries emerged from Covid pandemic restrictions last year, but it worsened following Russia’s invasion of Ukraine, which pushed energy and food prices even higher.
The Ukrainian economy is set to contract by almost one third this year in the wake of Russia’s invasion, the European development bank said.
Ukraine output is set to contract 30 percent compared with an EBRD forecast of minus 20 percent given in March shortly after Moscow’s military offensive.
Elsewhere Tuesday, oil prices fell further but the losses were less severe than the drops of more than six percent Monday on weaker demand concerns.

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