European, US markets down substantially

Equities markets in Europe and the United States were lower on Wednesday as fears of inflation and the higher interest rates it will were felt in many economies. A Merrill Lynch survey released this week, in fact, showed that two-thirds of global fund managers are convinced that core inflation will be up over the next year. A weak US dollar and worries about economic growth around the globe also had an effect on the markets.

In the UK, the FTSE 100 saw its largest one-day decline in points since October of 2002, losing 2.9 percent to 5,675.5. It was down 170.7 points. The FTSE 250 was also substantially lower, losing 2.8 percent, or 266.3 points, to close at 9,275.9. It was the sixth day in a row of declines in the markets there, following a five-year high for the 100 and the first breach of the 10,000 level for the 250 just over a week ago.

In the Eurozone, the FTSE Eurofirst 300 dropped 2.8 percent to 1,310.0. Meanwhile, at mid-session in New York, the Dow Jones Industrial Average had lost 1.2 percent, or 147.7 points, to 11,271.3. The New York markets were being affected by consumer inflation data that was higher for April than had been expected, due primarily to hikes in energy costs. This higher-than-predicted inflation caused investors to worry about possible increases in interest rates at a time when many analysts were predicting a pause in the current series of rate hikes by the Federal Reserve.

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