Recession clouds loom, Wall Street, Euro, Pound crash

Ahmedabad. 24 September 2022, Saturday

Due to rising interest rates in the global markets, there will be a mild impact on the economy emerging from the corona period, the economy will fall into recession, the markets are witnessing turmoil.

Stocks in America, the world's largest stock market, are nearing recession levels. On Friday, the Dow Jones index fell to its lowest level of the year and 20 percent from its last high. However, there was some improvement at the end of the day. The Dow fell 486 points to close at 29,590 on Friday.

The fear of recession is seen more in the forex and bond markets than in the stock market. The dollar index, which measures the value of the US dollar against six major world currencies, closed at 113.02, a 20-year high. The euro hit another two-decade low at 0.9689 against the dollar amid signs Germany's economy is slowing due to gas shortages and rising inflation. Britain's government has announced the biggest tax cut in 50 years to relieve people from recession and inflation. Following the announcement, the pound fell 3.49 percent to close at 1.08 against the dollar on Friday. This is a 37-year low.

In the bond market, British bond yields rose the most in 20 years. US bond yields are also rising.

Rising yields are showing concern that interest rates will rise further. On the other hand, a rise in the value of the dollar is showing a dot for cash. As global markets closed on Friday, it looked like selling in riskier assets and the flow to cash for safety would continue for a few more days.

Earlier, a 1000-point crash in Sensex in India's stock market also saw investors withdraw Rs. An erosion of 4.60 lakh crores was seen yesterday.

Meanwhile, American crude futures closed at $79 per barrel, the lowest level since 2022. Gold also fell by $29 to close at $1651 per ounce due to higher dollar.