FTSE 100 drops 1.3% as markets fall; retail sales hit by Omicron – live business | Business

European stock markets also had a difficult day, with the German DAX down almost 2% and the French CAC down 1.75%.

David Maddenmarket analyst at Equiti Capitalsays European markets have caught the bear bug from Wall Street.

Bearish sentiment dominates the markets as equities, oils and metals suffer steep declines. The mood in the markets has gradually deteriorated recently as traders brace for the prospect of the Federal Reserve raising interest rates three or four times this year, there is speculation that the first hike will take place in March.

The pessimism peaked today as European equities faltered under the pressure that hit US equities in recent sessions.

The London Stock Exchange recorded its biggest fall in almost two months.

The FTSE 100 index of blue-chip stocks closed 91 points lower at 7,494 points, down 1.2% today, amid the broader market decline.

This is its biggest drop since Nov. 26, when concerns over the Omicron variant sent markets tumbling.

Playgroup hear finished at the top of the pack, down 5.2%, followed by the steelmaker Evraz (-4.2%), tech-investor Scottish Mortgage (-3.9%), and hedge funds Pershing Square (-3.7%).

Only nine of the Footsie members avoided falling today, with banks, energy companies and homebuilders also weaker.

When it comes to economic policy, Janet Yellen says the Biden administration is using a “modern supply-side economics” strategy.

This approach prioritizes labor supply, human capital, public infrastructure, research and development, and investments in a sustainable environment.

Treasury Secretary Yellen says it’s superior to traditional supply-side economics that focused on deregulation and tax cuts to encourage investment.

These priority areas all aim to increase economic growth and address longer-term structural issues, particularly inequality.

So, for example, the US government is trying to make it easier for working-age parents to participate in the labor market and is proposing “wide-ranging investments” in human capital – from early childhood education to community college, in through apprenticeship and worker training. .

Yellen also cites changes to international tax rules agreed to last year, aimed at imposing a global minimum tax on foreign corporate profits.

She says:

This historic global tax agreement will end this race to the bottom by ensuring that profitable corporations pay their fair share, providing governments with resources to invest in their people and economy.

At the same time, it will level the playing field so that all multinational companies are subject to a minimum tax on their foreign income, rather than just US companies. This new system will improve productivity by encouraging companies to allocate capital to its most productive use, rather than to the use that produces the best tax result.

Some experts, however, have warned that Big Tech companies may still not pay their fair share under the global tax deal:

US Treasury Secretary Janet Yellen now addresses the World Economic Forum’s Davos Agenda event.

Yellen says that by most traditional measures, the pace of the US recovery has exceeded even the most optimistic expectations, thanks to vaccine deployments and the “strong support” provided to families, businesses and state and local governments by through the US bailout.

The US labor market is ‘exceptionally strong’, she continues – pointing to the six million jobs created last year as the economy recovers [but the labor market is still below pre-pandemic levels]

Household and corporate balance sheets are even healthier than before the pandemic, Yellen continues, unlike after the crash of 2008:

To date, we have not seen a significant or persistent increase in long-term unemployment, debt, evictions or bankruptcies. This contrasts with the consequences of the global financial crisis.

And on inflation (which hit 7% last month), Yellen says professional forecasters believe inflation will come down significantly next year as the White House tries to ease the supply chain crisis.

Part of this view is likely driven by the expectation that the Federal Reserve will continue to heed these pressures as it fulfills its dual mandate. And as the president has repeatedly noted, the administration continues to relentlessly pursue strategies to alleviate these pressures through actions such as reducing congestion at our ports and expanding labor supply. -work.

But she warns:

Yet even if policymakers continue to grapple with rising prices, our economic recovery will face significant risks until we have more decisively moved beyond the pandemic.

Wall Street is recovering from this earlier decline, with the Nasdaq now flat on the day…

European stock markets fell deeper into the red, with the FTSE 100 now down 98 points, or 1.3%, at the end of the session.

After a torrid start to the year, Wedbush analyst Dan Ives predicts that tech stocks could turn the tide…

The US stock market fell as yesterday’s sell-off in tech stocks continued to weigh on stocks.

The S&P 500 Index of U.S. listed companies took an early hit and is currently down 14 points, or 0.4%, at 4,468 points, bringing its losses so far this year to more than 6%.

netflix is the biggest loser, dropping 25% after shocking Wall Street by predicting new subscriber growth will fall to its lowest level in more than a decade this quarter.

waltz disneywhich runs rival streaming service Disney+, fell more than 6%

the Nasdaq Compound the index moved deeper into corrective territory, down 1.4% at one point, but is now down 0.5%.

Communications, Energy and Materials are the worst performing sectors, while Consumer Staples and Real Estate are up.

The Bank of England must lean against inflationary pressures and prevent expectations of higher price growth from taking hold, the policymaker says said Katherine Mann.

In his first speech as a member of the Monetary Policy Committee, Mann argued that monetary policy should “temper” expectations for wage and price increases.

This would prevent them from being integrated into business and consumer decision-making, creating a dangerous wage-price spiral, she says.

The Bank’s regular survey of chief financial officers shows that current price and wage expectations are inconsistent with the UK’s 2% inflation target, she says. If achieved in 2022, they should keep inflation high for longer [it is already 5.4%, a three-decade high].

Mann explains that last month’s interest rate hike was part of this process of managing medium-term wage and rate decisions, saying:

I know that we have already talked a lot here about the reduction in the cost of living. And to be clear, my aim is not to make the situation worse than it already is – on the contrary, I aim to bring inflation back to its target so that workers can enjoy real wage gains through at their work.

The small Bank Rate hike I voted for in December was intended to deliver on the commitment to the 2% target to influence strategic 2022 decisions that workers, businesses and asset owners are taking. Changing expectations is the first bulwark against a strengthening of the wage-price dynamic.

The Bank’s Monetary Policy Committee is widely expected to raise interest rates again when it meets early next month.

The head of the International Monetary Fund has warned that interest rate hikes by the Federal Reserve could “throw cold water” on already weak economic recoveries in some countries.

Speaking during a panel at the Davos Agenda, IMF Managing Director Kristalina Georgieva warned that the recovery was “losing a bit of momentum”.

U.S. rate hikes could have significant implications for countries with higher levels of dollar-denominated debt, she said, meaning it’s “extremely important” that the Fed clearly communicates its policy plans. to avoid surprises.

Losses in most stock markets in January were driven by fears that the Fed would raise rates in 2022, likely starting in March, and possibly four times before the end of the year.

CNBC has the details:

During a panel moderated by CNBC’s Geoff Cutmore, Georgieva said the IMF’s message to countries with high levels of dollar-denominated debt was: “Act now. If you can extend the deadlines, do so. If you have currency mismatches, now is the time to address them.

The IMF expects the global economic recovery to continue, Georgieva said, but stressed it was “losing a bit of momentum”.