European stock markets slid Friday after the Bank of England's gloomy
recession warning raised the spectre of stagflation, and as investors awaited
critical
US payrolls data, dealers said.
اضافة اعلان
London equities retreated 0.2 percent one day after the BoE unveiled a
half-point interest rate hike and forecast UK inflation topping 13 percent on
surging domestic energy bills.
The hike followed more aggressive monetary policy from the European Central
Bank and US Federal Reserve as authorities crack down on rampant inflation in
the wake of Russia's invasion of Ukraine.
India on Friday lifted borrowing costs for the third time in four months to
the highest level since summer 2019.
Back in the eurozone, Frankfurt stocks slipped 0.1 percent and Paris sank
0.5 percent, despite modest gains in Asia.
Oil prices held steady, one day after WTI crude fell to the level where it
had stood before the Ukraine conflict sent the market soaring.
- 'Stagflation
awaits' -
"The dire warnings from the BoE are impossible to ignore as other
central banks desperately try to avoid a similar fate," OANDA analyst
Craig Erlam told AFP.
"It seems only a matter of time until others are forced to accept that
a recession is the price to pay for getting inflation under control."
He added: "A period of stagflation now awaits the UK -- and others may
not be far behind as the crushing impact of energy prices wreaks havoc on living
standards and saps demand."
Stagflation is a toxic mixture of stubbornly high consumer prices and low
economic growth.
Later on Friday, traders will focus on key US non-farm payrolls (NFP) data
that could stoke fears of a prolonged downturn in the world's number one
economy.
"Market participants will closely scrutinize today's NFP report for any
signs that weakness in activity data in the US economy is starting to
spill-over into the labour market with a lag which would heighten (US)
recession fears," said MUFG analyst Lee Hardman.
Asian equities mostly rose Friday, with Taipei surging on easing concerns
over a conflict with Beijing -- even as China conducts its largest-ever
military exercises around Taiwan in response to US House Speaker Nancy Pelosi's
visit earlier this week.
And while many analysts are beating the drum of a global recession, traders
are also hopeful of a reprieve from monetary tightening.
"The recent fall in oil prices, which are now trading below the levels
immediately before Russia's invasion of Ukraine, has contributed to the
market's perception that inflation is likely to peak soon, taking pressure off
the Fed to raise rates as aggressively," said National Australia Bank's
Rodrigo Catril.
The Fed has said its rate decision will be guided by data, with signs of
economic weakness seen as likely to mean any increases will be light.
Officials have said the US economy remains healthy despite four-decade high
inflation and a sharp lift in borrowing costs.
- Key figures at
around 1030 GMT -
London - FTSE 100: DOWN 0.2 percent at 7,434.14 points
Frankfurt - DAX: DOWN 0.1 percent at 13,648.93
Paris - CAC 40: DOWN 0.5 at 6,479.50
EURO STOXX 50: DOWN 0.4 percent at 3,740.74
Tokyo - Nikkei 225: UP 0.9 percent at 28,175.87 (close)
Hong Kong - Hang Seng Index: UP 0.1 percent at 20,201.94 (close)
Shanghai - Composite: UP 1.2 percent at 3,227.03 (close)
New York - Dow: DOWN 0.3 percent at 32,726.82 (close)
Euro/dollar: DOWN at $1.0225 from $1.0246 Thursday
Pound/dollar: DOWN at $1.2147 from $1.2160
Euro/pound: DOWN at 84.19 pence from 84.26 pence
Dollar/yen: UP at 133.00 yen from 132.89 yen
Brent North Sea crude: FLAT at $94.11 per barrel
West Texas Intermediate: FLAT at $88.52 per barrel
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