Yahoo Finance $13 trillion wiped off markets in worst six months on record
The global market rout has wiped $13 trillion off world stocks in the worst start to any year on record as business and consumer confidence collapses amid surging inflation.
The MSCI World Equity Index has shed more than 20pc so far this year in the steepest first-half decline since its creation, led by a plunge in loss-making tech companies as investors panic over the end of ultra-low interest rates.
In the UK, the FTSE 100 fell 1.96pc on Thursday to close out its worst month since the early days of the Covid pandemic.
All but ten stocks closed in the red, reducing the value of blue chip companies by £50bn, amid fears the country will suffer the steepest recession in Europe.
It came after official figures revealed that British families have suffered the longest fall in disposable income ever, with a decline of 1.3pc in the year to March 2022.
Paul Dales, chief UK economist at Capital Economics, said: “Although GDP and consumer spending won’t fall as far as real incomes, it’s pretty clear that the economy is going to be very weak for a while. A recession is a real risk.”
Wall Street also suffered heavy losses on Thursday as fears of a slowdown were compounded by data showing that inflation-adjusted US consumer spending fell in May for the first time this year.
The benchmark S&P 500 fell 0.9pc, while the tech-heavy Nasdaq slumped 1.3pc. The S&P 500 has shed 20pc so far this year, marking its worst first half of the year since 1970 and its worst performance over two quarters since the financial crisis in 2008.
The Nasdaq posted its biggest ever declines over the same period, losing $5.4 trillion in value.
Investor worries deepened this week as top central bankers reiterated their commitment to raise interest rates to tackle a surge in prices fuelled by Russia's war in Ukraine.
Andrew Bailey, Governor of the Bank of England, warned that Britain faces a faster and steeper downturn than other rich countries, but still vowed to act “more forcefully” if high inflation – currently forecast to peak at 11pc in October – persists.
Jerome Powell, chairman of the Federal Reserve, insisted he would not allow the US economy to slip into a “higher inflation regime”.
Policymakers are expected to announce the second consecutive 0.75 percentage point interest rate rise next month.
In a further sign of the strain on families, data released on Thursday showed UK household incomes fell for a fourth straight quarter at the start of the year.
Adjusted for inflation, disposable incomes dropped 0.2pc in the first three months of the year, according to the Office for National Statistics, leaving incomes 1.3pc lower than a year earlier, even before the impact of a jump in energy bills and taxes in April.
The ONS figures also confirmed that the economy grew 0.8pc in the first quarter. However, the Bank of England expects a contraction in the second quarter as inflation continues to rise and consumers cut spending.
This gloom sent the FTSE 100 down more than 6pc in June, the biggest monthly slump since the first wave of coronavirus triggered a market crash in March 2020.
Market chaos also spread to cryptocurrencies, with Bitcoin racking up its biggest quarterly loss in more than a decade.
The 58pc plunge in the world’s biggest digital coin is the largest since the third quarter of 2011, when Bitcoin was still in its infancy, according to Bloomberg data.
The notoriously volatile sector has suffered a torrid period as interest rates rise and investors flee riskier assets, while a string of high-profile crashes and a looming regulatory crackdown have fuelled fears of a “crypto winter”.
