Tencent among big losers as global markets slump sparking recession fears

Global markets took a hit on Thursday after Wall Street suffered one of its worst hits in two years amid fears of a recession following decades of inflation.

LONDON — Global markets took a hit on Thursday after Wall Street suffered one of its worst hits in two years amid fears of a recession following decades of inflation.

Reports of low revenue from retailers heightened concerns about consumer resilience and pundits sounded gloomy.

“Inflation is catching up and profit margins are rising. Soon, however, these higher costs will be passed on and consumers will stop investing in savings and start spending more cautiously,” said Craig Erlam, senior market analyst at OANDA.

“The question is whether we are going to see a slowdown or a recession,” he said.

The Nasdaq and Dow fell around 1% in early trading, while European markets were down around 2% in the afternoon after major Asian indices ended in the red.

Tech giants were among the biggest losers after Chinese giant Tencent reported lackluster earnings, fueling wider concerns about China’s economic outlook.

Shares of Tencent fell more than 8% in early trading before easily erasing the losses, a day after posting their smallest increase in sales since its IPO in 2004.

Among other tech titans, Alibaba fell more than 6%.

“Sentiment…is very negative as traders and investors are very concerned about an economic slowdown and rising inflation,” said AvaTrade analyst Naeem Aslam.

On Wednesday on Wall Street, the three major US indices fell, with the Dow Jones losing more than 1,150 points, or 3.6%.

The Nasdaq was down 4.7% at the close.

North America-focused big-box retailer Target lost about 25% of its value after consolidated profits fell short of expectations despite higher sales.

The company posted higher operating expenses in results in line with its larger competitor, Walmart.

Retailers said consumers were avoiding discretionary purchases as prices for groceries, gasoline and other basics soared.

In some of his toughest statements to date, Federal Reserve Chairman Jerome Powell said this week that the Federal Reserve will raise interest rates until there is “clear and convincing” that inflation is falling.

But higher borrowing costs increase debt, further increasing pressure on consumers and businesses.

The United States, like Britain, is facing its fastest inflation in four decades, prompting the Bank of England to raise interest rates as well.

  • AFP
RosGwen24 News
RosGwen24 News
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