European stock markets tumble on rising fears of recession
Rising worries about a European recession hit stock markets on Tuesday as the euro slumped to a two-decade low and the pound fell to its lowest since the start of the pandemic.
Shares tumbled in London and across Europe as a jump in natural gas prices intensified the strain on the European economy.
The single currency fell by 1.5% to $1.026 against the US dollar, the lowest since late 2002. The pound dropped below the $1.20 mark to a two-year low of $1.193, the weakest point against the dollar since March 2020.
Oil also tumbled as recession fears mounted, with Brent crude diving 6% to below $107 a barrel, the lowest since mid-May.
Mining stocks, oil producers and airlines were among the big fallers in London, where the FTSE 100 share index had lost 182 points or 2.5% in afternoon trading. Anglo American and Glencore shed 7%, while BP and Shell fell 6%.
Germany’s DAX index, and France’s CAC, also fell by about 2.4%.
Investors are anxious that rate hikes by central banks desperate to tackle soaring inflation will push economies into recession. Further disruption to Russian energy supplies would also trigger a European downturn, analysts have warned.
“Everyone is looking for peak inflation, but we’re probably at the point where it’s at its most dangerous as it becomes sticky,” Neil Wilson of Markets.com said.
“High and sticky inflation is the worst combination since it means expectations have been unanchored. This will only push the Federal Reserve and other central banks to inflict more pain.”
A jump in natural gas prices on Tuesday, after strike action forced Norway’s Equinor to shut three oil and gas fields, added to concerns over the economic outlook.
“The panic crept back in on Tuesday as a fresh surge in natural gas prices
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