Global stocks are plummeting, the dollar hits 20-year highs due to fears of inflation

NEW YORK, May 12 (Reuters) – Global equities fell to their lowest point in 18 months on Thursday as the dollar reached a 20-year high, as investors feared that inflation pushing up interest rates would bring the world economy to a halt.

These nerves and a German warning that Russia was now using energy supplies as a “weapon” put pressure on Europe’s continental-wide STOXX 600 index, which was down 0.63%. MSCI’s target for stocks across the globe (.MIWD00000PUS) was down 0.67%, at 11:31 ET (1520 GMT).

The global flagship index is almost 20% lower for the year – the worst start to a year in recent memory.

The US markets were mixed. The Dow Jones Industrial Average (.DJI) fell 160.04 points, or 0.5%, the S&P 500 (.SPX) lost 6.9 points, or 0.18%, and the Nasdaq Composite (.IXIC) added 65 , 04 points, or 0.57%.

The dollar index rose 0.452%, with the euro down 1% to $ 1.0406. Global growth-sensitive Australian and New Zealand dollars fell around 0.8% to their lowest level in almost two years. The Chinese yuan plummeted to a 19-month low. .

Almost all major volatility meters (.VIX), (.V2TX) signaled danger. Bitcoin was caught in a fire sale of risky cryptocurrencies when it fell another 8% to 26,570 dollars, after being close to 40,000 dollars just a week ago and almost 70,000 dollars in November last year.

“We’ve had big moves,” said Caroline Simmons, UBS ‘chief investment officer, referring to bond markets and economic expectations. “And when the market falls, it tends to fall quite quickly.”

Tensions were created again when Finland confirmed that it would apply to join NATO “without delay” in the wake of Russia’s invasion of Ukraine, a war that has already had a major economic impact by driving up global energy and food prices. read more

The US Department of Labor said that the final price producer price index rose by 0.5% in April as rising costs for energy products moderated. PPI rose 1.6 percent in March. read more

The decline in monthly producer price increases follows a similar trend in consumer prices last month.

Data on Wednesday showed that inflation in the US was persistently warm, although it increased by the minimum amount of eight months. Overall consumer prices rose 8.3% in April on an annual basis, a fraction lower than 8.5% in March, but still above economists’ forecasts of 8.1%. read more

SELL IN MAY

The major pan-Asia Pacific indices (.MIAPJ0000PUS) closed down 2.5% at a 22-month low overnight. Japanese Nikkei (.N225) fell 1.8. Shares in emerging markets lost 2.28 percent.

US government interest rates plummeted on Thursday. The yield on 10-year government bonds fell 4.3 basis points to 2.870% as the benchmark index for US government bonds reduced its losses after falling to a low of 2.8173% in the morning.

Germany’s 10-year interest rate, the benchmark for Europe, fell as much as 15 bps to 0.85%, the lowest in almost two weeks.

The prospect of the fastest rise in Fed interest rates in decades is driving up the US dollar and taking the heaviest toll on more risky assets that have soared over two years with stimulus from the pandemic and low-interest lending.

Nasdaq (.IXIC) is down almost 8% in May so far and more than 25% this year. Hong Kong’s Hang Seng Tech Index (.HSTECH) fell 1.5% on Thursday and is more than 30% lower this year.

The cryptocurrency markets are also merging, with the collapse of the so-called stablecoin TerraUSD which highlights the turmoil as well as sales in bitcoin and the second largest crypto, ether, which fell 15%. read more nL3N2X337U]

Tether, currently the world’s largest stable currency by market value with a value directly linked to the dollar, broke below its so-called “stick” in US dollars on Thursday. Global sales have now wiped out more than $ 1 trillion from the crypto markets. Around 35% of the loss has come this week.

“The collapse of the pins in TerraUSD has had some nasty and predictable spillovers. We have seen widespread liquidation in BTC, ETH and most ALT coins,” said Richard Usher, head of OTC trading at BCB Group, referring to other cryptocurrencies.

In the commodity trade, oil rose due to supply concerns.

US crude rose 1.27% to $ 107.05 a barrel and Brent was at $ 108.38, up 0.81% on the day.

Gold and other precious metals fell on Thursday, with palladium losing more than 8% as investors flocked to the dollar.

Spot gold fell 0.7% to $ 1,838.50 per ounce at 11:31 am EDT (1531 GMT). US gold futures fell 0.8% to $ 1,839.10.

Reference copper on the London Metal Exchange (LME) fell 3.6% to $ 9,000 a tonne in official trading after falling as low as $ 8,938. Prices are down 17% from a record high of $ 10,845 reached in March.

Reporting by Elizabeth Dilts Marshall; additional reporting by Marc Jones in London and Tom Westbrook in Singapore; Edited by Chizu Nomiyama, Kirsten Donovan and Alison Williams

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