The collapse of the global market wiped out $ 13 trillion in global stocks at the worst start of any year in history, as business and consumer confidence collapsed amid rising inflation.
The MSCI World Equity Index has fallen more than 20 percent so far this year in its steepest decline in the first half of its creation, driven by the collapse of loss-making technology companies as investors panic at the end of ultra-low interest rates.
In the UK, the FTSE 100 fell 1.96 percent on Thursday to end its worst month since the early days of the Covid pandemic.
All but ten stocks closed in the red, reducing the value of blue-chip companies by £ 50 billion amid fears the country would experience the worst recession in Europe.
This came after official data revealed that British families had experienced the longest decline in disposable income ever, with a decline of 1.3% in the year to March 2022.
Paul Dales, chief British economist at Capital Economics, said: “Although GDP and consumer spending will not fall to real incomes, it is quite clear that the economy will be very weak for some time. The recession is a real risk. “
Wall Street also suffered heavy losses on Thursday, as fears of a slowdown were compounded by data showing that inflation-adjusted consumer spending in the United States fell in May for the first time this year.
The reference S&P 500 fell 0.9 percent, while the tech Nasdaq fell 1.3 percent. The S&P 500 has dropped 20% so far this year, marking its worst first half since 1970 and its worst performance in two quarters of the 2008 financial crisis.
The Nasdaq recorded its biggest drop in the same period, losing $ 5.4 trillion in value.
Investors’ concerns deepened this week as senior central bankers reaffirmed their commitment to raise interest rates to deal with the price spike fueled by Russia’s war in Ukraine.
Andrew Bailey, the governor of the Bank of England, warned that Britain was facing a faster and steeper decline than other rich countries, but still promised to act “stronger” if high inflation – currently projected to reach 11% in October – continued.
Jerome Powell, chairman of the Federal Reserve, insisted he would not allow the US economy to enter a “higher inflation regime.”
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