Title: Shares slump as retail giants sound stagflation alarm

May 19, 2022 08:26AM ET

By: AnalysisWatch

A sharp fall in European and Asian stock markets followed Wall Street's worst day since mid-2020 on Thursday, as stern warnings from the world's biggest retailers underlined how hard inflation is hitting.

In the South, Europe was down 2%, led by a 2% fall in the retail sector (EU), while a steep overnight falls in red-hot US futures and Chinese technology shares pushed the MSCI All-Country World MSCI to 1-1.5-year lows.

This index of 47 countries is now down nearly 18%, its worst start to a year ever.

On Wednesday, the S&P 500 fell 4%, while the Nasdaq fell nearly 5%, as interest-sensitive mega cap stocks Amazon (NASDAQ: AMZN), NVidia (NASDAQ: NVDAQ), and Tesla (NASDAQ: TSLA) fell nearly 7%, while Apple (NASDAQ: AAPL) fell 5.6%.

The Asia-Pacific shares outside Japan then broke four days of gains, falling 1.8%, dragged down by a 1.65% loss in the Australian heavyweight commodity index and a 2.5% decline in Hong Kong. Tokyo's Nikkei also lost 1.9%.

In currency markets, the US dollar fell 0.3% against a basket of major currencies after ending a three-day losing streak with a 0.55% jump overnight.

The euro strengthened 0.4% on the prospect of an ECB interest rate hike, while the Australian dollar rose 0.8% and the New Zealand kiwi gained 0.6%, helped by the easing of the Shanghai COVID embargo against China.

US Treasuries rose overnight to 2.84% in Europe, where risk-averse sentiment also pushed the yield on the German 10-year bond-which moves inversely with the exchange rate-back below the tight 1% level.

In London trading, Brent crude oil fell from $110.41 to $108.04 a barrel in London trading, while US crude fell to $108.05 a barrel and gold, which has fallen more than 12% since March, rose to $1,830 an ounce.