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Fear of rising inflation, China’s slowdown slumps global stock market

Fear of rising inflation, China’s slowdown slumps global stock market

Fears of increasing inflation, as well as China's export growth slowdown, have reportedly fueled concerns regarding the global economy, sending global markets tumbling at the start of the week.

Stocks across the Asia-Pacific, United States, and Europe all dropped below the red as investors feared the global growth is weakening, at a time where central banks are boosting interest rates to fight rising inflation.

The FTSE 100 index in London plummeted to its lowest point in eight weeks on Monday, falling 171 points or 2.32% to 7,216 at the closing bell. Mining firms were also among the ones who fell. Japan's Nikkei 225 Stock Average had dropped 2.5% earlier in the day.

Stocks fell after China's export growth slowed to 3.9% year on year in April, dropping from 14.7% in March. Imports remained unchanged as a result of China's Covid breakouts, and consequent lockdowns, which reduced demand and hindered production.

Analysts believe the slowdown demonstrates that the world's second-largest economy is struggling from shutdowns in major cities, including Shanghai, has have disrupted industry production and jammed supply networks.

At the closing of trading, European stocks had dropped to a two-month low, dropping 2.9%. After its worst stretch of weekly drops in over a decade, the S&P 500 index plummeted 3.2% on Wall Street, to its lowest point in a year. Meanwhile, Nasdaq slumped 4.29% as investors traded off once-hot tech companies once more.

Developing market equities slumped to their lowest point since June 2020, as China's weakening economy intensified the effects of increasing interest rates across the globe and the continuous turmoil due to the Ukraine conflict.

Li Keqiang, China's premier warned that the nation’s job scenario was grave and complex, and insisted government agencies and localities focus on steps to support and sustain jobs. This added to fears that China's economic limitations are having a devastating impact.

Bitcoin has dropped below $32,700, its lowest point since July 2021. In the previous six months, it has lost half of its worth.

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Omkar Patwardhan

Omkar Patwardhan started his professional career in the hospitality industry. Having nurtured a deep-sated passion for words however, he found his way into content writing and now pens down articles for numerous websites, including News Origins, spanning the sectors of business, finance, and technology.