Global shares tumble into bear market

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Gauge of sharemarkets around the world has shed 21 per cent from a peak in January as investors grow nervous about the effects of higher interest rates.

P/ASX 200 index from the peak in August last year to 13.8 per cent.spread across Asia on Monday and then into Europe before further intensifying later in the day in New York trading to push the SP 500 index of US blue chips into a bear market, defined as a decline of a fifth or more from the peak.P 500 fell 3.9 per cent on Monday to bring the benchmark 21.8 per cent below its high in early January.

The pain sweeping global equity markets reflects the prospects of a hasty series of interest rate increases by central banks around the world, including the US Federal Reserve, which is fighting to temper the hottest inflation in four decades. The Fed is the world’s most influential central bank and has faced criticism for maintaining its ultra-easy policy footing alongside record fiscal spending, a sharp rebound from the pandemic recession and roaring sharemarkets.Jan Hatzius, chief economist for Goldman Sachs, said the investment bank now anticipates a series of three consecutive monthly 50 basis point interest rate increases from the Fed beginning this week, with a further 25 basis point hike in December.

 

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