Stock markets plunge again as flurry of interest rate hikes fuels recession fears

theguardian.com:

The global rout in stock markets, cryptocurrencies and other risky assets has gathered pace amid growing concern that out-of-control inflation, rising interest rates and slowing growth could combine to tip the world into recession.

Share prices plunged in Asia on Friday at the beginning of what was likely to be another torrid day for investors spooked by the US Federal Reserve’s decision this week to raise interest rates by the largest margin for almost 30 years.

Other leading central banks such as the Bank of England and the Swiss National Bank have followed suit – the latter in its first hike for 15 years – sending economists scrambling to revise their forecast for growth downwards.

Stephen Innes at SPI Asset Management in Hong Kong said: “No central bankers worth their weight would put inflation-fighting credentials on the line and import higher energy inflation via a weaker currency.

Despite the Bank of Japan announcing on Friday that it was sticking to its ultra-loose monetary policy, he added the rate rises eleswhere were a “highly ominous signal for stock market investors… the global race to hike rates is nowhere near the finishing line”.

Many believe that the United States may be in recession by next year, raising the prospect of a wider global slump.

Shares in the world’s biggest economy have suffered their worst start to a year for 60 years with the S&P 500 benchmark index down 23% since January after losing another 3.25% on Thursday. Analysts at JP Morgan said the state of the S&P 500 “implies an 85% chance of a US recession”.

The falls – mirrored on the Dow Jones average, the tech-heavy Nasdaq and UK and European markets – did nothing to boost confidence in Asia Pacific where the Sydney market was down 2.4% on