Tuesday 11 May 2021 2:54 pm

Wall Street closes lower as inflation jitters spark broad sell-off

US stocks closed lower today as rising commodity prices and labor shortages fed fears that despite reassurances from the US Federal Reserve, near-term price spikes could translate into longer-term inflation.

While all three indexes pared their losses from session lows, the sell-off was fairly evenly dispersed across the sectors.

The Dow Jones Industrial Average fell 473.66 points, or 1.36 per cent, to 34,269.16, the S&P 500 lost 36.33 points, or 0.87 per cent, to 4,152.1 and the Nasdaq Composite dropped 12.43 points, or 0.09 per cent, to 13,389.43.

Meanwhile UK stocks clocked their worst day since late October on Tuesday after a sudden drop in big U.S. tech stocks over inflation concerns.

The FTSE 100 closed down 2.47 per cent while the FTSE 250 similarly fell 2.34 per cent.

All the FTSE 100 constituents were trading in negative territory.

Tech turbulence roils stocks

The biggest drag on global markets was a slump in tech stocks as worries about inflation heightened fears that central banks could tighten monetary controls.

The US FANG+ index of tech giants including Facebook, Amazon, Apple, Netflix and Google slid 3.6 per cent on Wall Street last night.

Electric car behemoth Tesla slid 6.4 per cent while Google was down 2.5 per cent.

“The market just can’t shake the inflation fears which are clouding the recovery from Covid,” said AJ Bell investment director Russ Mould.

“Some days investors appear relaxed about inflation risks and the possibility of central banks having to lift rates and withdraw stimulus. Today is not one of those days as, after last night’s big sell-off on Nasdaq, the FTSE 100 finds itself undoing much of its recent progress and trading below 7,000.

Meanwhile Chinese tech heavyweights Baidu, Alibaba and Tencent — collectively known as BAT — all dropped more than three per cent amid concerns about Beijing’s crackdown on tech.

Food delivery app Meituan slumped 10 per cent, losing $30bn of its market value week on week, after its chief executive posted an ancient Chinese poem on social media.

The poem, which was quickly deleted, was widely interpreted as a criticism of President Xi Jinping and left investors rattled.

Market movers

Sainsbury’s was the only afternoon riser, up 0.3 per cent, while RSA Insurance remained flat.

Engineering firm Renishaw was the afternoon’s biggest faller, dropping by 7.5 per cent, followed by British Airways owner IAG’s 6.5 per cent hit.

Meanwhile, Melrose Industries and fashion house Burberry both dipped by 6.9 per cent and 5.3 per cent respectively.

Around the world

Asian tech stocked tumbled today after a selloff on Wall Street as investors braced for US inflation data.

Selling was heavy in Hong Kong, where the Hang Seng tech index fell three per cent and dragged the broader market down nearly two per cent.

In European trades, the pan-region Euro Stoxx 50 futures were down 2.3 per cent, while Germany’s DAX plunged 2.1 per cent.