BUSINESS Stocks sink on fears of US debt default, recovery doubts


Stocks sink on fears of US debt default, recovery doubts


19:52, October 01, 2021

A global stocks sell-off deepened Friday on the first day of the fourth quarter, propelled by fears of a possible US debt default and growing economic recovery doubts.

London stocks dropped 1.1 percent nearing midday, while in the eurozone Frankfurt shed 0.8 percent and Paris slid 0.7 percent in early afternoon deals.

That followed heavy losses earlier in Asia and overnight in New York.

"Stock markets in Europe fell sharply in the first day of trading in the new quarter, taking the cue from a dismal finish on Wall Street," said analyst Neil Wilson.

"It's a sea of red for European bourses though hefty early losses were pared after the first hour of trade."

News that US lawmakers had finally passed legislation to avert a costly government shutdown did little to allay concerns about the fact that they are unable to agree a deal to raise the debt limit.

Investors also absorbed the latest official data showing soaring inflation.

Eurozone consumer prices surged in September by 3.4 percent on an annualised basis -- the fastest pace since 2008 -- as energy costs rocketed.

Most global central banks insist that the current inflation spike is temporary, but investors remain fearful that tighter monetary policy could further damage any post-Covid recovery.

The inflation news "probably has not helped general sentiment", Interactive Investor analyst Richard Hunter told AFP.

"Having said that, the European Central Bank is singing from the same song sheet as the other major central banks in assuming that the elevated level of inflation is transitory."

"Time will tell" whether the ECB would need "some tightening action in due course", he said.

Investors are preparing for the Federal Reserve to start tapering its massive bond-buying programme before the end of the year.

All three main indexes on Wall Street ended in the red on Thursday, with the S&P shedding more than four percent in September.

Asia followed suit with Tokyo losing 2.3 percent.

Sydney shed two percent despite news that Australia will begin to reopen its borders in November after 18 months of restrictions.

Hong Kong and mainland Chinese markets were closed for a holiday.

- Key figures around 1100 GMT -

London - FTSE 100: DOWN 1.1 percent at 7,010.42 points

Frankfurt - DAX: DOWN 0.8 percent at 15,145.76

Paris - CAC 40: DOWN 0.7 percent at 6,472.69

EURO STOXX 50: DOWN 0.8 percent at 4,016.65

Tokyo - Nikkei 225: DOWN 2.3 percent at 0615 GMT (close)

Hong Kong - Hang Seng Index: Closed for a holiday

Shanghai - Composite: Closed for a holiday

New York - Dow: DOWN 1.6 percent at 33,843.92 (close)

Euro/dollar: DOWN at $1.1579 from $1.1580 at 2100 GMT on Thursday

Pound/dollar: UP at $1.3477 from $1.3474

Euro/pound: DOWN at 85.92 pence from 85.95 pence

Dollar/yen: DOWN at 111.13 yen from 111.29 yen

Brent North Sea crude: DOWN 0.5 percent at $77.94 per barrel

West Texas Intermediate: DOWN 0.6 percent at $74.59

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