US shares slide back after short respite

US shares slide back after short respite

Wall Street shares are on the way down again after brief gains on Wednesday.

The moves follow a day of losses on all key European exchanges. The 100 share index in London closed down 1.49% at 7,170.69 points. Germany and France fell 2.6% and 2% respectively.

In New York, the Dow Jones was down 2.45%, or 611 points, at 24,282.30, with the S&P and Nasdaq also down 2%.

Fears that a stronger global economy will push inflation and interest rates higher are again driving the falls.

The Bank of England’s latest policy meeting left interest rates where they were at 0.5% but said a strengthening economy meant interest rates were likely to rise sooner than the markets were expecting.

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Weekly jobless figures out in the US on Thursday showed claims for unemployment relief fell to their lowest level in nearly 45 years.

Thursday’s sessions saw a return to the steep falls sparked around the world by positive news on employment and wages in the US at the end of last week.

Higher employment in theory means employers have to pay more to attract and retain the workers they want.

Higher wages can allow higher inflation, which then requires higher interest rates to contain it.

Most central banks have targets for inflation within which they are supposed to keep it contained.

Higher interest rates push up borrowing costs for companies and individuals.

Analysts have said for months that the financial markets were due a correction after a long period of rising prices.

Source: BBC News

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