Futures for the S&P 500 and Dow Jones Industrial Average fell 0.9% on Thursday before the bell.
Shares in Europe and Asia fell sharply after the fall of US markets.
The German DAX fell 1.6% at noon, while the CAC 40 in Paris fell 1.7% and the British FTSE 100 fell 2.1%.
The Dow fell more than 1,100 points, or 3.6%, on Wednesday. The S&P 500 fell the most in almost two years, falling 4%, and the heavy-duty Nasdaq fell 4.7%.
The benchmark is now falling more than 18% from the high reached at the beginning of the year. This is very small of the 20% drop that is considered bear market.
“The market climate is extremely negative, as traders and investors are very concerned about the recession and the spike in inflation,” said Avatrade’s Naeem Aslam.
Rising interest rates, high inflation, the war in Ukraine and the slowdown in China’s economy have prompted investors to reconsider the prices they are willing to pay for a wide range of stocks, from high-tech companies to traditional automakers.
The last bear market happened just two years ago, but it would still be the first for those investors who started trading on their phones during the pandemic. For years, thanks in large part to the US Federal Reserve’s emergency actions, stocks often seemed to go in only one direction: upwards. Now, the well-known rally cry for a “dive market” after every market swing gives way to the fear that the dive will turn into a crater.
The Federal Reserve is trying to mitigate the impact of the highest inflation of the last four decades by raising interest rates. Many other central banks are on a similar path. However, the Bank of Japan has maintained its low interest rate policy and the gap between these benchmark interest rates of the world’s largest and third largest economies has pushed the value of the dollar against the Japanese yen.
Japan reported a trade deficit in April as its imports rose 28%. The change reflects rising energy costs amid the war in Ukraine and the weakening yen against the US dollar.
The Nikkei 225 in Tokyo lost 1.9% to 26,402.84 points and the Hang Seng in Hong Kong fell 2.5% to 20,120.60 points. In South Korea, Kospi fell 1.3% to 2,592.34 points, while Australia’s S & P / ASX 200 fell 1.7% to 7,064.50 points.
The Shanghai Composite Index reversed its previous losses, gaining 0.4% to 3,096.96 points.
On Wednesday, retailer Target lost a quarter of its value after reporting gains that were well below analysts’ forecasts. Inflation, especially for shipping costs, dragged its operating margin for the first quarter to 5.3%. Expect 8% or higher.
The company warned that the cost of transporting cargo this year would be $ 1 billion higher than it had estimated just three months ago.
The report comes a day after Walmart said its profits were affected by higher costs. The country’s largest retailer fell 6.8%, adding to its losses from Tuesday.
Target and Walmart provided anecdotal evidence that inflation was burdening consumers, saying they had stopped buying big tickets and switched from national brands to cheaper store names.
Weak reports have fueled concerns that persistently rising inflation is putting more pressure on a wide range of businesses and could further reduce their profits.
Other big retailers also suffered heavy losses.
The data is not completely consistent. On Tuesday, the market was excited by an encouraging report from the Ministry of Commerce that showed retail sales increased in April due to higher sales of cars, electronics and higher restaurant spending.
Investors are worried that the Fed could cause a recession if it raises interest rates too high or too fast. Concerns about global growth remain as Russia’s invasion of Ukraine puts even more pressure on oil and food prices, while lockdowns in China to reduce COVID-19 cases exacerbate supply chain problems.
In other trades, US benchmark crude oil fell $ 1.27 to $ 108.32 a barrel in electronic trading on the New York Mercantile Exchange. It fell to $ 2.81 on Wednesday at $ 109.59.
Crude Brent, the basis for international pricing, fell 71 cents to $ 108.40 a barrel.
The dollar fell to 127.92 Japanese yen from 128.20 yen late Wednesday. The euro strengthened to $ 1.0514 from $ 1.0464.
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