Global stock markets tumbled on Thursday, with the FTSE 100 falling 1.8%, as fears over rising inflation and slowing economic growth rattled investors. The decline followed sharp drops in the US and Asia, triggered by gloomy forecasts from major retailers.
In London, the FTSE 100 closed 135 points lower at 7,302.7, while France's Cac-40 and Germany's Dax fell 1.3% and 0.9% respectively. Royal Mail was the biggest loser, sinking over 12% after reporting disappointing results and warning of rising costs. Tesco fell 1.8% and Unilever dropped nearly 1%.
On Wednesday, US shares suffered their worst one-day drop since the early days of the Covid pandemic in 2020. The S&P 500 plunged over 4%, the Dow Jones fell 3.5%, and the tech-heavy Nasdaq dropped 4.7%. In Asia, Japan's Nikkei closed down 1.9% and Hong Kong's Hang Seng fell 2.5%.
The sell-off was sparked by Target's warning that unexpectedly high fuel and freight costs had halved its profits compared to a year ago, and that shoppers were cutting back on discretionary items. This followed a similarly downbeat update from Walmart earlier in the week.
Countries are grappling with steep inflation, with the UK's rate hitting a 40-year high of 9% in April. Central banks are raising interest rates to counter price rises, raising concerns of a recession. Susannah Streeter of Hargreaves Lansdown said: 'A red wall of worry has built up across financial markets with investors increasingly nervous that economies are set to career into recession.'
