European markets have followed Asian markets lower on Tuesday as investors continued to dump shares.
London, Frankfurt and Paris all fell sharply at the open with losses of up to 3%, before recovering some ground. In the US overnight the Dow lost 4.6%. The sell-off began last week after data in the US showed stronger wage growth, which raised expectations that US interest rates might start to rise more quickly to tackle inflation.
London’s FTSE 100 was down 126 points or almost 2% at 7,207 after the first few hours of trading, while Frankfurt’s Dax and Paris’s CAC were down 2% and 1.6% respectively.
On Monday the FTSE 100 closed at its lowest level since April of last year. The falls follow some good years for investors.
In 2017 the Dow in the US was up 25% and London’s FTSE 100 rose 7.6%.The softness of markets over the last few days is down to one thing.
As monetary policy begins its long journey away from the trillions of pounds of stimulus pumped into the system to keep the economic ship from the rocks, shareholders are beginning to wonder how much of their investments are in companies with strong fundamentals. And how much is simply holding up an asset bubble - frothy prices led ever higher in an era of ultra low interest rates and cheap money.
(BBC)
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