25 April 2022
- FTSE 100 opens down 1.9%
- CAC 40 opens down 2%
- DAX opens down 2.5%
- Hang Seng down 3.9%
- Nikkei down 1.9%
- Brent crude down 3.7%
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.
‘’The sigh of relief over the outcome of the French presidential election are being drowned out by the growing murmurs of discontent about the myriad problems mounting for the global economy.
The FTSE 100 has opened sharply lower, as has the CAC 40 and DAX in Frankfurt. It follows steep falls of the Hang Sang and Nikkei as worries ricochet to Asia and Europe about the more aggressive monetary policy path set to be taken by the US Federal Reserve. Super-hot inflation is settling like an ominous heat cloud over the world’s largest economy, and although a succession of steeper interest rate hikes might blast cold air onto demand, the worry is that the policy could blow up into a recession, which would have knock on effects around the world.
The scourge of Covid continues, with China unwavering in its zero tolerance policy. As cases erupt in Beijing, there is concern that prolonged lockdowns will hit employment and lead to a sharp slowdown in growth as well as sparking fresh shipping logjams and supply chain issues.
In France, with the status quo maintained for another five years as Macron retains the keys to the Élysée Palace and far right Marine Le Pen is thwarted in her third attempt at presidency there is some reassurance for investors. However it won’t be business as usual in the République. Macron will have to offer more to the disgruntled millions who voted for Le Pen in greater numbers to avoid fresh potentially destabilising protests during his term.
The drop in the oil price with Brent crude falling around 3.7% to $102 a barrel, won’t be enough yet to pacify gilet jaunes protestors, given that oil is still 32% higher than the start of the year. There is little doubt that worries about falling demand in China is hitting traders sentiment, coupled with an expected slowdown in the US. However the price is set to stay volatile given the brutal ongoing battles in Ukraine are adding to the spring tides of worry. Russia’s commitment to waging war in the East of the country remains unwavering and there is still some expectation that European countries which are still holding out against a Russian crude embargo, may relent in the face of Moscow’s continuing aggression.’’