Recession fears weigh on markets as rising inflation bites – business live | Business

In the City, the FTSE 100 index has dropped by 1% in early trading, down 74 points at 7363.

Retailers such as Kingfisher (-4.9%), Tesco (-4.8%) and Next (-2.2%) are among the fallers.

EasyJet narrows losses

Easyjet aircraft at Manchester Airport
Easyjet aircraft at Manchester Airport Photograph: Oli Scarff / AFP / Getty Images

Budget airline easyJet says it “faces summer 2022 with optimism”, after narrowing its losses due to strong bookings despite the cost of living squeeze.

Easyjet told shareholders that bookings in the last 10 weeks have been consistently above the same period in 2019, as demand after travel restrictions were lifted.

It reports: It reports:

  • · Forward bookings for the third quarter are 76% sold and 36% sold for the fourth quarter.
  • · In the last 10 weeks, bookings have been 6% above the same period in 2019
  • · Easter holidays saw load factors of 90%

The disruption caused by Omicron pushed easyJet into a pre-tax loss of £ 545m in the six months to the end of March, compared with a £ 701m loss a year earlier.

EasyJet was hit by staff sickness this year, leading to a wave of flight cancellations in the Easter period.

And despite the pick-up in bookings, easyJet says it still faces short-term uncertainty, so won’t provide any further financial guidance for the 2022 financial year.

Customers are booking closer to departure and visibility remains limited.

Johan Lundgren, easyJet chief executive said the airline had’transformed’ during the pandemic:

“EasyJet has reduced its losses year on year, at the better end of guidance. The pent-up demand and removal of travel restrictions provided for a strong and sustained recovery in trading which has been further boosted as result of our actions.

These include the radical reallocation of aircraft which has seen more than 1.5m seats moved to the best performing markets and the step-change in our ancillary products delivering increased revenue –both of which have contributed to our total yield increasing by 9% compared to the same period in FY19. All of this is not only delivering now but with more to come in the future as even more passengers take to the skies.

Shares have opened almost 1% higher.

US wheat prices have continued to rise today, which will add to inflationary pressures in the food sector.

The move comes after India unexpectedly banned wheat exports last week, and the Russia-Ukraine war kept underpinning global grains markets –raising concerns of a global food crisis.

Reuters has the details:

The most-active wheat contract on the Chicago Board of Trade (CBOT) was up 0.89% at $ 12.41-3 / 4 a bushel.

CBOT wheat had climbed more than 8% over the past two days, following India’s wheat ban and reports showing bad condition of US winter crop.

CBOT soybeans edged up 0.95% to $ 16.78-1 / 2 bushel, extending gains, while corn rose 0.48% to $ 7.85-1 / 4 a bushel.

Ukraine invasion could cause global food crisis, UN warns

Martin Farrer

Martin Farrer

The United Nations has warned that the war in Ukraine has helped to stoke a global food crisis that could last years if it goes unchecked, as the World Bank announced an additional $ 12bn in funding to mitigate its “devastating effects”.

UN secretary general António Guterres said shortages of grain and fertiliser caused by the war, warming temperatures and pandemic-driven supply problems threaten to “tip tens of millions of people over the edge into food insecurity”, as financial markets saw share prices fall heavily again on fears of inflation and a worldwide recession.

Speaking at a UN meeting in New York on global food security, he said what could follow would be “malnutrition, mass hunger and famine, in a crisis that could last for years”, as he and others urged Russia to release Ukrainian grain exports.

He said he was in “intense contact” with Russia and other countries to try to find a solution.

“The complex security, economic and financial implications require goodwill on all sides for a package deal to be reached,” he said of his discussions with Moscow, Ukraine, Turkey, the US, the European Union and others.

“I will not go into details because public statements could undermine the chances of success.”

The foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea.
The foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea. Photograph: Ahn Young-joon / AP

Asia-Pacific markets have dropped, following last night’s heavy losses on Wall Street.

Hong Kong’s Hang Seng is leading the selloff, down 2.4% in afternooon trading, with South Koria’s KOSPI losing 1.5% and Japan’s Nikkei off 1.9%.

Technology stocks slid, with Tencent Holdings losing 6.6% after reporting its slowest revenue growth on record following China’s crackdown on technology companies.

Stephen Innes of SPI Asset Management Management. says Target’s weak quarterly earnings added fuel to the recession risk narrative, on top of fears over rising interest rates:

Equities continue to be at the mercy of broader macro themes, with more hawkish comments from Fed Chair Jay Powell leading to a further move higher in front-end rates, which continues to prove problematic for risk.

Medium-term, the Fed is likely to respond to any easing in financial conditions by ratcheting up the hawkish noises and, in effect, acting as a lid on the markets. And this should keep active money on the sidelines.

Dominic Rushe

Dominic Rushe

The wild ride on the US stock markets continued on Wednesday with the Dow Jones Industrial Average sinking more than 1,100 points as investors worried about a looming recession.

All of the major US markets fell sharply, with the S & P closing down 4%, its largest fall since June 2020, and the tech-heavy Nasdaq losing 4.7%.

On Tuesday markets had rallied following positive news about consumer spending and signs that China was relaxing its strict Covid-19 lockdowns. Just a day later concerns about an economic slowdown triggered a wide-ranging sell-off.

The sell-off began after Target said supply chain costs and inflationary pressures had cut into its profits and customers were purchasing fewer higher-margin items such as kitchen appliances, televisions and furniture. More here:

Introduction: US stocks worst day since 2020 amid recession worries

Trading updates on monitors on the trading floor at the New York Stock Exchange yesterday
Trading updates on monitors on the trading floor at the New York Stock Exchange yesterday Photograph: Andrew Kelly / Reuters

Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.

Recession fears are swirling through the markets again, as rising inflation and snarled supply chains hit economies, driving up the cost of living and hitting some company profits.

Last night, US stocks posted the biggest daily drop in almost two years, on concerns that economic growth will falter as central bankers look to raise interest rates to stem the surge in inflation.

Fed chair Jerome Powell’s determination to keep lifting borrowing costs until inflation falls meaningfully has rattled Wall Street, and is likely to push European markets lower today too.

The S & P500 fell more than 4% lower yesterday, Nasdaq slumped more than 5% and the Dow slid more than 3.5%.

Ipek Ozkardeskayasenior analyst at Swissquote Bankexplains:

Powell said this week that the Federal Reserve would go beyond what could be a neutral rate to tame inflation.

But at this point, no one knows where the neutral rate is, even the central bankers don’t have a clue.

The main catalyzers behind the move are always the same: the worry of high inflation, tighter Fed to fight the sky-high inflation, and the fear of recession.

Tech stocks, which had benefitted from ultra-loose monetary policy in 2020 and 2021, were hammered again –sending the Nasdaq Composite down nearly 28% so far this year. Apple lost 5%, while Amazon shed 7%.

Last Nasdaq ATH was Nov 19 2021 and today we are exactly 6 months into the 13th bear market over the past 50 years. Still some way to go if we use history as a guide… pic.twitter.com/CEaSGa6cC6

— Johan Javeus (@JohanJaveus) May 19, 2022

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Last Nasdaq ATH was Nov 19 2021 and today we are exactly 6 months into the 13th bear market over the past 50 years. Still some way to go if we use history as a guide … pic.twitter.com/CEaSGa6cC6

— Johan Javeus (@JohanJaveus) May 19, 2022

The benchmark S & P 500 share index saw its biggest loss since June 2020 too, with traders spooked by retailer Target. Its stock plunged 27% after it cut its profit forecast and warned costs were mounting.

Walmart had made a similar warning on Tuesday, as it grappled with surging inflation on food and fuel.

Data showing a drop in US housing starts, and building permits, added to concerns that the US economy could be slowing.

Jim Reid of Deutsche Bank explains: explains:

There wasn’t a single catalyst behind the slump, but weak housing data out of the US along with Target’s move to cut its profit outlook helped feed investor concern that the consumer might not be in as strong a position as previously thought.

And that’s on top of all the other worries of late that the global economy is heading in a stagflationary direction amidst various supply-chain issues, alongside the prospect that tighter central bank policy is going to further dent growth and risks tipping various economies into recession.

That could include the UK, which looks vulnerable to a downturn after inflation hit a 40-year high of 9% yesterday.

European Opening Calls:#FTSE 7395 -0.58%#DAX 13915 -0.66%#CAC 6310 -0.68%#AEX 686 -1.03%#MIB 23944 -0.59%#IBEX 8437 -0.47%#OMX 1995 -0.39%#SMI 11525 -0.46%#STOXX 3662 -0.79%#IGOpeningCall

— IGSquawk (@IGSquawk) May 19, 2022

n”,”url”:”https://twitter.com/IGSquawk/status/1527153539944165377″,”id”:”1527153539944165377″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”38030f9c-4a04-4d8c-bfae-35ffabb42cd3″}}”/>

The agenda

  • 9.30am BST: Latest UK economic and business activity report from the ONS
  • 11am BST: CBI industrial trends report
  • 12.30pm BST: ECB Monetary Policy Meeting Accounts
  • 1.30pm BST: US weekly jobless figures
  • 3pm BST: US home sales