as major retailers reported that rising inflation was hitting consumer spending and eating into their profit margins.
Wall Street has opened lower, a day after its worst selloff in nearly two years. The pan-European Stoxx 600 index is down 1.3% with personal care companies, food and beverage companies, tech stocks and retailers all weakening. The FTSE 100 index is down 163 points or 2% in afternoon trading at 7274 points. London stock markets tumbled into the red on Thursday, with blue chip shares on track for its biggest one-day drop in two months. “I think what we need to start getting more comfortable with is, that may not be the last shock,” Georgieva said, adding that the Omicron outbreak last year had shown that inflation would not be a “transitory” one time shock. Speaking to Reuters at the sidelines of a meeting of G7 finance ministers and central bank chiefs in Germany, Georgieva cited mounting pressures on energy and food prices from Russia’s war in Ukraine, and the supply chain disruption and cost pressures caused by China’s zero-Covid policies. The IMF’s managing director, Kristalina Georgieva, said it is becoming harder for central banks to bring down inflation without causing recessions. Global finance leaders should prepare for multiple inflationary shocks, the head of the International Monetary Fund has warned, as fears of a global economic downturn continue to hit markets around the world. So while goods price inflation may fall, it may be hard to keep a lid on the price of services, particularly with higher wage costs amid the fight for labour also being passed onto customers. A trend also seems to be emerging of people wanting to save their dollars to spend on experiences like holidays rather than homewares with luggage at Target selling fast.Ĭonsumers are showing more caution but after the pandemic lockdowns there is clearly pent up demand for travel with airlines like easyJet ramping up capacity to meet demand and bookings at restaurants surging. With consumer spending power expected to be eroded further through interest rate rises, the worry is that Target’s pain is a precursor for yet more struggles to come for retailers. The slide was sparked by the US retail giant Target warning that customers were already buying fewer high ticket items like furniture and electronics, with higher fuel prices and supply chain costs also eating into margins. Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, says those disappointing results from US retailers have spooked markets. Germany’s DAX has shed 2%, with France’s CAC 1.9% lower, as European markets slide following Wall Street’s worst day since 2020.Įuropen food and beverage company stocks have dropped 2.5% to a two-month low, on concerns that cash-strapped consumers will be forced to cut back in the face of soaring inflation, and rising interest raters. The FTSE 100 this morning Photograph: RefinitivĬonsumer goods and services firms, energy companies, banks and industrial stocks are the worst-performing sectors.
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