NEW YORK, May 12 (Reuters) – Global stocks fell to their lowest level in 18 months on Thursday on fears that high inflation persists and forces central banks to continue tightening monetary policy.
In the United States, equities ended a sawtooth session slightly lower as investors juggled fears of nagging inflation with signs it could top. The S&P 500 has come close to confirming a bear market since fading from its all-time high reached in January.
In Europe, economic concerns were heightened by a German warning that Russia was now using energy supplies as a “weapon”.
The continental European STOXX 600 index fell 0.75%. The MSCI Global Stock Gauge (.MIWD00000PUS) was down 0.69%, as of 5:09 p.m. ET (21:09 GMT).
This leading global index is nearly 20% lower for the year.
The Dow Jones Industrial Average (.DJI) fell 103.81 points, or 0.33%, to 31,730.3, the S&P 500 (.SPX) fell 5.1 points, or 0.13%, to 3,930.08 and the Nasdaq Composite (.IXIC) added 6.73 points, or 0.06%, to 11,370.96.
The dollar hit a 20-year high as global economic fears boosted its appeal as a safe haven.
The dollar index rose 0.711% after touching 104.92, its highest since December 12, 2002. The euro fell 0.02% to $1.0377 after falling to 1.0352, its lowest since January 3, 2017.
Oil prices settled mixed on supply fears due to the impending European Union ban on Russian oil. Brent crude fell 6 cents to settle at $107.45 a barrel. WTI crude rose 42 cents, or 0.4%, to settle at $106.13.
The U.S. Department of Labor said the producer price index for final demand rose 0.5% in April, slower than the 1.6% rise in March, as rising utility costs energy products moderated. Read more
Consumer price inflation slowed to an 8.3% year-on-year rise in April from March’s 8.5% pace, but beat the 8.1% forecast by economists. Read more
“It’s been a tough time for financial assets since the Fed hiked rates…and the ensuing strength in the U.S. jobs market and CPI data heightened concerns about the extent of the task facing the Fed,” the analysts at ANZ Bank wrote.
SELL IN MAY
US Treasury yields slipped. The 10-year Treasury yield US10YT=RR fell 7.1 basis points to 2.843% after the benchmark US government bond fell to an early morning low of 2.816%.
Germany’s 10-year yield, the benchmark for Europe, fell 15 basis points to 0.85%, its lowest in nearly two weeks.
The rout continued in the cryptocurrency markets, with the collapse of the so-called stablecoin TerraUSD; selloff in bitcoin and a 15% drop in the next biggest crypto, ether. Read more nL3N2X337U]
Tether, currently the world’s largest stablecoin by market capitalization with a value directly pegged to the dollar, has fallen below its so-called “peg” to the US dollar. The global selloff has now wiped over $1 trillion from the crypto markets. About 35% of that loss came this week.
“The collapse of the TerraUSD peg had unpleasant and predictable fallout. We saw a large sell-off in BTC, ETH and most ALT coins,” said Richard Usher, Head of OTC Trading at BCB Group. , referring to other cryptocurrencies.
Precious metals also fell. Spot gold fell 1.7% to $1,821.52 an ounce. US gold futures fell 1.64% to $1,823.80 an ounce.
Benchmark copper on the London Metal Exchange (LME) fell 3.6% to $9,000 a tonne in official trading after falling to $8,938. Prices are down 17% from the record high of $10,845 reached in March.