Stock indices across Europe opened higher but then crashed and fell around 1% by late morning. The Stoxx Europe 600 fell 1.2%, after climbing as high as 1%, extending its losses for a sixth straight day. The index was at its lowest level since March 2021. The FTSE 100 in Britain fell 1% and the DAX in Germany 0.9%.
“Investors are just reassessing global risk,” said Bruce Pang, Hong Kong-based analyst at China Renaissance Securities. “They want to play it safe.”
On Tuesday, government bond yields retreated from their recent highs. The yield on 10-year US Treasuries fell to 3.30%. The day before, as stocks plunged, the yield jumped to 3.36%, the highest since 2011.
At the same time, cryptocurrencies continued to decline amid a series of stock market crashes. On Monday, Celsius Network, an experimental cryptocurrency bank, froze withdrawals, sending depositors into a panic. Bitcoin has fallen to its lowest since 2020. In the early morning hours in New York, it has fallen 7% in the past 24 hours, according to CoinMarketCap.
Investors have tried to make sense of what is happening in the global economy.
The World Bank issued a dire warning last week, saying recession will be hard to avoid for many countries. On Monday, ratings firm Fitch lowered its 2022 forecast for global gross domestic product, or GDP, to 2.9% from an estimate of 3.5% in March. These are just the latest in a series of global economic downgrades as Russia’s protracted war in Ukraine strains global supply chains, disrupts trade and drives up the prices of oil, wheat, metals and other essential commodities.
As inflation soars, central banks around the world, from Australia to Canada, have moved to raise rates. On Thursday, the Bank of England is expected to raise its key rate for a fifth consecutive meeting. Last week, the European Central Bank announced that it would raise rates next month for the first time in more than a decade.