Global stocks fell Wednesday and the euro dipped below $1.00 for the first time in nearly 20 years. Image: Shutterstock
Global stocks fell Wednesday and the euro dipped below $1.00 for the first time in nearly 20 years after data showed a surge in US inflation last month, convincing investors that further increases in borrowing costs are on their way.
Stock prices on Wall Street retreated after a sharp uptick in US inflation to 9.1 percent in June increased the risk of a possible recession.
The broad-based S&P 500 finished down 0.5 percent.
European stock markets also ended the session lower, while the euro fell below the symbolic level of $1.00 for the first time since December 2002, dipping as low as $.0998, as the prospect of higher interest rates rendered the dollar more attractive to investors. But it soon moved back above parity.
The economic prospects for the 19-country eurozone are also darkening as a possible halt to Russian gas supplies increases the risk of recession.
Inflation tops 9%
US inflation surged to a 40-year high in June on a 12-month basis, much worse than expected, US Labor Department data showed.
Beyond the hit to consumption from high prices, analysts worry the report will prompt the Federal Reserve to adopt even tougher measures to tighten monetary policy, such as a full percentage point interest rate increase at the July 27 meeting.