Time for a recap.
Stock markets have fallen sharply on a jittery day in the City, Wall Street and beyond.
Technology shares led the selloff, with the Nasdaq Composite index currently down 2.5%, on track for its worst day since March.
Mega-cap tech companies are among the fallers, with Apple now down 4%, Amazon shedding 3.1%, Alphabet/Google losing 2.6%, Microsoft dropping 2.2% and Facebook down 2.6%.
Germany’s DAX index suffered its worst fall of 2021, dropping 2.5%, after chipmaker Infineon warned that about 2.5 million cars won’t be produced in the first half of 2021 due to ongoing supply chain shortages.
The FTSE 100 had started the day brightly, with travel companies rallying on hopes that holiday restrictions will be eased this summer. But after jumping over 7,000 points near to a one-year high, it ended down 46 points at 6923.
The selloff accelerated after Treasury secretary Janet Yellen suggested there could be ‘very modest’ interest rate rises to counter the inflationary impact of US stimulus spending.
As our economics editor Larry Elliott explains:
Fears of rising interest rates to dampen inflationary pressure as the global economy bounces back from Covid-19 has sent shares tumbling on both sides of the Atlantic.
Comments from America’s treasury secretary Janet Yellen that a modest increase in borrowing costs might be needed to rein in demand was enough to send tremors through financial markets already jittery as a result of shortages of computer chips.
Traders has already been spooked by a curious drop in shares earlier today, dubbed a ‘micro flash-crash’ that suggested some anxiety building in the markets.
The latest economic data had highlighted that inflationary pressures are building, as economies recover from the pandemic.
In the UK, factories reported the strongest growth since the mid-1990s — and a painful supply chain squeeze that was driving up input costs.
Separately, the Bank of England reported a record jump in mortgage lending, and another drop in consumer credit as people paid off their bills.
Advertising magnate Sir Martin Sorrell also sounded upbeat, with his S4 Capital hiking its sales and profit forecasts:
“We are extremely optimistic about our prospects for this year and next, given the huge global fiscal and monetary stimulus introduced to counter the impact of the pandemic and the subsequent increase in consumer savings ratios and stagnation of corporate capital investment.
“The chickens may well come home to roost in 2023, given the debt burden that most countries will have and the tax increases that will have to be implemented. But, digital marketing expenditure remains robust, even in a recession, as our results last year demonstrate, given its secular growth trend.”
On the corporate front… Pfizer lifted its sales and earnings forecasts, predicting it would rake in $26bn in sales of its Covid-19 vaccine this year.
Jewellery maker Pandora announced it would no longer sell mined diamonds – saying it was more ethical, and cheaper, to use lab-made ones instead.
Here are more of today’s stories: