Global stock markets fall sharply amid China and inflation fears

theguardian.com:

Global markets fell sharply on Monday as fears over rising inflation and a slowdown in China’s export growth fuelled worries about the health of the world economy.

Stocks in Asia-Pacific markets, Europe and the US all dropped into the red as investors fretted that global growth is weakening, at a time when central banks are raising interest rates to rein in surging inflation.

In London, the FTSE 100 fell to its lowest level in more than seven weeks, down 1.7% or 125 points in afternoon trading at 7,268, with mining companies among the fallers. Japan’s Nikkei had closed down 2.5% earlier on Monday.

Stocks slid after China’s export growth hit a near two-year low of 3.9% a year in April, down from 14.7% growth in March. Imports were flat, as China’s Covid outbreaks cut demand and disrupted manufacturing.

Analysts said the slowdown showed that the world’s second-largest economy was suffering from the lockdowns in big cities such as Shanghai, which have affected factory production and snarled up logistics chains.

“Two of the biggest concerns are supply chains and the impact of inflation including higher interest rates. As a result of severe Covid lockdowns, China’s export growth is at a two-year low,” said Mihir Kapadia, the chief executive of Sun Global Investments.

“The supply chain disruptions will in turn impact earnings of companies around the world, and thereby their stocks,” added Kapadia.

European markets fell to a two-month low, down 1.7% in afternoon trading.

In New York, the S&P 500 index dropped 1.7% at the start of trading on Wall Street, after its worst streak of weekly losses in more than a decade.

Commodities weakened, with copper prices hitting their lowest since mid-December in London at $9,160 (£7,440) a tonne.