Stock markets retreat on weak global growth worries


— AFP/File
— AFP/File

LONDON: Stock markets retreated Tuesday on renewed concerns over weak global growth, with a profit warning from the owner of Snapchat spooking investors and further shocking the tech sector.

It comes amid concerns over the impact of China’s Covid-19 restrictions on the world’s second-largest economy after the United States.

Monday’s strong Wall Street rally, where the Dow closed up 2%, did not carry over into Asian and European trading.

Snap, the parent of social media app Snapchat, saw its share price slump more than a quarter in futures trading ahead of Tuesday’s reopening of Wall Street.

“Snap provided a shock,” noted Neil Wilson, chief market analyst at Markets.com.

The company “spooked the market with a macroeconomic warning that dented tech the most and pointed to earnings revisions that could drag the market lower for longer”, he added.

The biggest faller in London Tuesday was however energy group SSE, whose share price dived around 10% on reports that the UK government may impose a windfall tax on excess profits enjoyed by electricity producers.

Prime Minister Boris Johnson has so far indicated he does not want to impose such a tax on oil and gas producers despite them also earning vast sums as prices soar.

Johnson argues an exceptional levy on the likes of BP and Shell would harm their efforts to invest in greener fuels like solar and wind power.

In China, Beijing’s announcement Monday of a fresh raft of measures to stimulate the economy did little to calm investors’ nerves.

China’s economy has taken a hit from Beijing’s zero-Covid approach to the pandemic, which has resulted in lengthy lockdowns of major cities and mass testing of millions of people.

Prolonged virus lockdowns have constricted supply chains, dampened demand and stalled manufacturing.

Investment banks UBS Group and JPMorgan Chase have responded by cutting their China economic growth forecasts.

“The lingering restrictions and lack of clarity on an exit strategy from the current Covid policy will likely dampen corporate and consumer confidence and hinder the release of pent-up demand,” UBS economists including Tao Wang wrote in a research note.

Concerns over the Chinese economy and its impact on oil demand weighed on crude prices Tuesday.

Key figures at around 1000 GMT 

London – FTSE 100: DOWN 0.3% at 7,488.05 points

Frankfurt – DAX: DOWN 0.8% at 14,056.39

Paris – CAC 40: DOWN 1.2% at 6,283.96

EURO STOXX 50: DOWN 1.1% at 3,669.62

Tokyo – Nikkei 225: DOWN 0.9% at 26,748.14 (close)

Hong Kong – Hang Seng Index: DOWN 1.8% at 20,112.10 (close)

Shanghai – Composite: DOWN 2.4% at 3,070.93 (close)

New York – Dow: UP 2.0% at 31,880.24 (close)

Euro/dollar: UP at $1.0711 from $1.0692 at 2030 GMT Monday

Pound/dollar: DOWN at $1.2489 from $1.2587

Euro/pound: UP at 85.77 pence from 84.92 pence

Dollar/yen: DOWN at 127.32 yen from 127.90 yen

Brent North Sea crude: DOWN 0.4% at $112.96 per barrel

West Texas Intermediate: DOWN 0.3 at $109.98 per barrel



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