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European stock markets collapsed Wednesday morning amid inflation fears as U.S. crude oil hit a seven-year high.
In London, the FTSE 100 (^ FTSE) fell more than 1.2% after the opening, trading below 7,000 points, while the French CAC (^ FCHI) fell more than 1 , 3% and the DAX (^ GDAXI) was also close to 1.3. % lower in Germany.
It happened as U.S. crude hit its highest level since 2014, extending its recent rally amid tight supply, rising demand and soaring gas prices. European natural gas hit new highs again on Wednesday.
A barrel of U.S. crude hit $ 79.40, while Brent crude (BZ = F) hit a three-year high of $ 83 a barrel.
“I think the recovery in crude oil is a big part of the stagflation concerns, especially for emerging market economies which are also net importers of oil. India and China for n ‘ to name a few, ”said Fawad Razaqzada, market analyst at Think Markets.
“Even in the most advanced economies, rising crude oil prices have pushed up fuel prices, which has a direct impact on disposable income for consumers.
“The other factors are driven by other energy prices – notably gas, but also soaring electricity prices – as well as bottlenecks in the supply chain – the latter increasing at both inflation and damaging economic growth. “
Meanwhile, German industrial orders fell 7.7% in August as bottlenecks and supply shortages hit factories.
Europe’s largest economy suffered during the month after two months of sharp increases. The numbers are much worse than the 2.1% drop expected by analysts.
Auto and auto parts manufacturers were the hardest hit, with orders down 12% from the previous month.
Watch: gas prices in Europe hit record highs
Across the pond, S&P 500 futures (ES = F) fell 0.7%, Dow futures (YM = F) fell 0.6%, and futures Nasdaq (NQ = F) fell 0.9% at the start of trading in Europe.
Asian stocks mostly fell overnight amid rising energy prices and inflation fears.
In Tokyo, the Nikkei (^ N225) fell more than 1%, extending losses for an eighth consecutive session, while the Hang Seng (^ HSI) fell 0.4%. The Shanghai Composite (000001.SS) is closed until Friday due to a public holiday.
Traders remain concerned that new Japanese Prime Minister Fumio Kishida could present a redistribution plan that includes higher taxes, including on capital gains.
Read more: Fossil Fuel Industry Gets $ 11 Million Per Minute In Subsidies, IMF Says
Elsewhere, the Bank of New Zealand raised interest rates for the first time in seven years in an attempt to contain rising inflation. The Reserve Bank of New Zealand (RBNZ) raised its key rate by a quarter of a percentage point to 0.5%.
“The committee noted that further removal of monetary policy stimulus is expected over time, with future measures contingent on the medium-term outlook for inflation and employment,” the RBNZ said.
Watch: New Zealand abandons its COVID elimination strategy
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