Eurozone and US stocks sank on Tuesday on gas supply fears and fresh indications that inflation is denting consumer health following an earnings forecast downgrade from Walmart.
Wall Street indices finished firmly lower after Walmart cut its profit forecast, saying rising prices for gasoline, food and other staples were cutting into consumer demand for goods with higher profit margins.
That was followed by a downcast Conference Board reading on consumer confidence due to rising prices.
All three major US indices fell, with the broad-based S&P 500 losing 1.2 percent.
The declines came as the Federal Reserve kicked off a two-day monetary policy meeting expected to conclude with another large interest rate hike, as the central bank seeks to quell sky-high inflation.
In Europe, the natural gas reference price Dutch TTF surged nearly 13 percent to 203 euros ($205) per megawatt hour, one day after Russia’s Gazprom said it would cut daily gas deliveries to Europe via the Nord Stream pipeline.
“With no clear timeline for when capacity is likely to increase, the prospect of further uncertainty over gas supplies is weighing on European markets today,” CMC Markets analyst Michael Hewson told AFP.
Frankfurt’s DAX slumped 0.9 percent while the CAC in Paris shed 0.4 percent.
Gazprom’s announcement prompted European Union energy ministers agreed to steps to try to limit dependence on Russian supply.
The plan nominally commits EU countries to reduce their gas use by 15 percent during the winter, although exceptions were carved out for some countries and Hungary rejected the deal.
Meanwhile, Asian stock markets closed mixed.
Investors welcomed news that e-commerce giant Alibaba would seek a primary listing in Hong Kong, which could pave the way for it to be traded by mainland Chinese investors.
The International Monetary Fund cut its forecast for global growth this year by four-tenths of a point to 3.2 percent due to surging inflation and severe slowdowns in the United States and China, the world’s two largest economies.
IMF chief economist Pierre-Olivier Gourinchas said the United States has only a slim chance of avoiding a downturn.
“The current environment suggest that the likelihood that the US economy can avoid a recession is actually quite narrow,” he said as the IMF cut its forecast for US economic growth this year by a drastic 1.4 percentage points to 2.3 percent.
– Key figures at around 2050 GMT –
New York – Dow: DOWN 0.7 percent at 31,761.54 (close)
New York – S&P 500: DOWN 1.2 percent at 3,921.05 (close)
New York – Nasdaq: DOWN 1.9 percent at 11,562.57 (close)
Frankfurt – DAX: DOWN 0.9 percent at 13,096.93 (close)
Paris – CAC 40: DOWN 0.4 percent at 6,211.45 (close)
London – FTSE 100: FLAT at 7,306.28 (close)
EURO STOXX 50: DOWN 0.8 percent at 3,575.36 (close)
Tokyo – Nikkei 225: DOWN 0.2 percent at 27,655.21 (close)
Hong Kong – Hang Seng Index: UP 1.7 percent at 20,905.88 (close)
Shanghai – Composite: UP 0.8 percent at 3,277.44 (close)
Euro/dollar: DOWN at $1.0126 from $1.0220 Monday
Pound/dollar: DOWN at $1.2030 from $1.2043
Euro/pound: DOWN at 84.09 pence from 84.84 pence
Dollar/yen: UP at 136.95 yen from 136.69 yen
Brent North Sea crude: DOWN 0.7 percent at $104.40 per barrel
West Texas Intermediate: DOWN 1.8 percent at $94.98 per barrel
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