The nightmare scenario that’s developed this year has already walloped equities, which suffered a bruising first half.
And from industrial gas guzzlers to retailers who rely on consumers with money to spend, the damage is proving widespread. Nordstrom Inc plunged 20% on one day alone after slashing its full-year outlook, while Macy’s Inc also cut its forecast. In the United Kingdom, a retail stock gauge has slumped about 35% so far this year.
Federal Reserve chair Jerome Powell signalled on Friday that the US central bank will keep tightening policy and pushed back against the idea it would reverse course soon. Some European Central Bank officials want to discuss a hike of 75 basis points in September. UBS Group AG economists say the eurozone economy has already entered a recession, and Morgan Stanley last week cut its growth forecast. In the UK, energy bills are set to almost triple this winter, adding to the squeeze in a country where inflation is already the highest in four decades.
The damage is already ripping through industrial and chemical firms. Yara International ASA and Grupa Azoty SA have slashed output, and lower fertiliser supply could hit agriculture, with repercussions for food costs. Avoiding pitfalls is only half the battle in any crisis, and identifying potential winners is high on the list of stock traders’ priorities.In Europe, the energy sub-index is up 26% this year.
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