Closing post
Time for a recap.
Global stock markets have racked up fresh losses today, as a slowdown in China’s export growth fuelled concerns over the global economy.
With inflation pressures high, investors continued to worry that central banks will push economies into recession by hiking interest rates to slow inflation.
In London, the FTSE 100 index has dropped to a seven-week low, down 120 points, or 1.6% at 7264 points, with mining stocks among the fallers.
European stocks also hit two-month lows, as a slowdown in China’s export growth worried the markets.
And in New York, stocks have extend their recent selloff, with the tech-focused Nasdaq Composite index falling another 2.5%, and the S&P 500 hitting its lowest point for the year.
CNBC: Dow loses 400 points, Nasdaq tumbles to new low for 2022 as sell-off intensifies#NASDAQ #StockMarket pic.twitter.com/LT7NG5mCIn
— InteractivePolls (@IAPolls2022) May 9, 2022
Commodity prices have also dropped, with copper hitting its lowest since December, while the risk-off mood pushed bitcoin to its lowest since July 2021.
The US dollar continued its rally, hitting a new 20-year high.
The broad dollar index has risen to its strongest since 2002. https://t.co/o2csCZWhdB pic.twitter.com/eairR3pQBr
— Lisa Abramowicz (@lisaabramowicz1) May 9, 2022
Morale in the eurozone dropped, pushing the Sentix index of investor confidence fell to a near two-year low in May, the third monthly drop in a row.
Sentix managing director Manfred Huebner warned that the global economy is facing a “perfect storm”, while signs of a eurozone recession were rising.
And in the UK, Bank of England policymaker Michael Saunders warned that inflation spike even higher than feared.
In other news....
Morrisons is poised to beat the owners of Asda in the race to buy McColl’s, the struggling convenience store chain that is expected to be put into administration as soon as Monday morning.
Barclays has avoided nearly £2bn in tax via a lucrative arrangement in Luxembourg that allowed it to pay less than 1% on profits in the tax haven for more than a decade.
EasyJet is planning to remove seats in some of its planes this summer as part of a strategy to cut the number of staff it needs, as the airline industry struggles
Half of older women fear they will have to keep working beyond the state pension age in order to make ends meet, according to research.
The boss of one of Britain’s biggest energy suppliers has warned Rishi Sunak that the government must announce further help for families soon, to avoid an autumn emergency as the cost of living crisis deepens.
The UK government has expanded its sanctions against Russia to include punitive import tariffs on Russian precious metals, as well as export bans on certain UK products.
The US also hit Moscow with new sanctions, targeting services, Russia’s propaganda machine and its defence industry.
And we’ve been inside one of the UK’s first licenced medical cannabis labs, where medicinal marijuana is being produced to help people with chronic pain treatments.
Goodnight. GW
BoE's Saunders warns UK inflation could be even higher than forecast
Bank of England policymaker Michael Saunders is worried that inflation could be even higher than the Bank’s latest forecasts.
Last week, the Bank predicted the inflation could hit 10% before the end of the year, the highest level since 1982, as it lifted interest rates by a quarter-point to 1%.
But in a speech this afternoon, Saunders warned that the cost of living squeeze on British households from high inflation could be bigger and last for longer than expected.
That’s why he was one of three policymakers to vote for a half-point rise, he explains.
Here are the key points from Saunders’ speech, at a Resolution Foundation event.
- Inflation, and key measures of longer-term inflation expectations, are uncomfortably high. Alongside large gains in prices of energy and consumer goods, domestic inflation pressures have been rising in recent quarters, evident in trends in capacity strains, longer-term inflation expectations, underlying pay growth and services inflation.
- The strength of external costs is eroding real incomes and is likely to cap real spending. But, by creating a long period of above-target inflation, these external cost increases also may exacerbate the rise in inflation expectations and hence, with the tight labour market, could make it harder to ensure domestic inflation pressures return to a target-consistent pace.
- Against this backdrop, the MPC has recently raised rates by nearly 100bp. At our most recent policy meeting, most MPC members (including myself) judged that, based on our updated assessment of the economic outlook, some degree of further tightening in monetary policy may still be appropriate in the coming months.
- I put considerable weight on risks that, unless checked by monetary policy, domestic capacity and inflation pressures would probably be greater and more persistent than the central forecast in the recent Monetary Policy Report. As a result, my preference has been to move relatively quickly to a more neutral monetary policy stance.
Michael Saunders talks about the outlook for the UK economy and inflation. He then sets out his views on interest rates. https://t.co/sfayfr34GR pic.twitter.com/MSSPpzvHwl
— Bank of England (@bankofengland) May 9, 2022
