Global equities fell further on Thursday 19th May , unable to sustain a late rally on Wall Street, as investors dumped stocks on fears of sluggish growth and bought safe-haven assets such as government debt and the Swiss franc.
Supply chain woes continued to fuel inflation and growth concerns as Cisco Systems Inc (CSCO.O) warned of persistent component shortages, knocking its shares down 13.7%. The plunge made it the latest big name stock this week to post its largest decline in more than a decade.
The heavy declines occurs after dire warnings from some of the largest retailers in the world about just how hard inflation is hitting pushed Wall Street to its worst day in nearly two years.
Bond markets were higher on bets that interest rate rises may be recalibrated and in the move to safety, but the action was dominated by the gloom pushing down equities after the $25b wipeout in shares of U.S. retail giant Target on Wednesday.
Wall Street, which lost $1.5t in total, reopened another 1% down, Europe lost 2% as retailers dropped 2.5%, and Chinese tech firms also fell overnight. This resulted in MSCI's global stock index falling toward 18 month lows.
The Chief Investment Officer at Close Brothers Asset Management, Robert Alster said the disappointing numbers from Walmart and Target have really spooked people.
Big slides for Walmart on Tuesday and Target on Wednesday have demoralized investors who wonder about rising costs across the supply chain, said Michael James, managing director of equity trading at Wedbush Securities.
He added that this will likely be followed by a slew of downgrades to U.S. GDP forecasts and it looked like the slowdown is much faster than what was expected.
That MSCIs global index is now nearly 18% lower in what is its worst beginning to a year recently.
The downbeat news from US retailers hit shares in UK companies reliant on consumer spending. The UK's biggest retailer, Tesco, fell 1.8%, while shares in consumer goods giant Unilever dropped nearly 1%
However, the biggest faller on the UK market was Royal Mail, which sank more than 12% after reporting disappointing results and warning it was facing “significant headwinds” from rising costs.
The FTSE 100 closed 135 points lower at 7,302.7, while France's Cac-40 index and Germany's Dax dropped by 1.3% and 0.9% respectively.
In Asia, Japan's benchmark Nikkei index closed down 1.9%, while Hong Kong's Hang Seng dropped 2.5%.
That came after the S&P 500 index in the US, which tracks shares of a wide swathe of America's biggest companies, plunged more than 4% on Wednesday and the Dow Jones Industrial Average dropped 3.5%.
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