Double-digit British inflation was mainly behind the decline in stock markets in Europe. The rate of price growth in the island kingdom has surpassed the 10 per cent mark and caught investors by surprise. They now expect further tightening of monetary policy by the Bank of England.
The most significant decline was recorded by the German DAX
The pan-European Stoxx 600 index shed about 0.7 percent on Wednesday. The stock exchange in Frankfurt am Main fell the most, with the DAX index losing about 1.5 percent. Surprisingly little was written off by the London Stock Exchange (about 0.3 per cent), although it was the bad news from the UK in particular that caused the change in mood on European stock markets.
Wall Street stocks also fell
The bad mood managed to spread from Europe to overseas, where the main Wall Street indices also headed into negative territory after the start of trading. The Nasdaq technology index lost more than one percent, the Dow Jones and S&P 500 0.5 to 0.7 percent.
The UK faces double-digit inflation for the first time since February 1982 and investors expect the Bank of England to tighten policy further. This may, among other things, deepen the UK’s economic recession.
