Fears of global economic downturn spark losses in financial markets

Stock markets have fallen heavily in June

Mounting fears of a global economic downturn and potential recession pulled the FTSE and other major indexes significantly lower yesterday.

Andrew Bailey and other central bank bosses did little to calm the nerves of traders preparing for a shaky economy over the coming months.

The governor of the Bank of England warned that inflation will hit Britain harder than any other major economy during the current energy crisis.

The FTSE 100 ended the day down 143.04 points, or 1.96%, at 7,169.28.

Craig Erlam, senior market analyst for UK and Europe at Oanda, said: “Stock markets have fallen heavily in June, so it seems only fitting they’re ending the month with big losses as reality continues to bite.

“There’s no getting away from recession chat and

“

while the heads of the Fed, ECB (European Central Bank) and BoE didn’t exactly fuel that during their panel discussion on Wednesday, they didn’t do anything to dispel it either.

“They all know that there’s a strong likelihood of recession this year or next and investors are increasingly accepting that fate as well.”

Record inflation in France added to woes across the Channel as the major Eurozone markets prepare for the ECB to hike rates.

The German Dax decreased by 1.54% by the end of the session, while the French Cac slid by 1.92%.

In the US, the picture was also downbeat as traders took their cues from falls in European stocks.

Meanwhile, the pound was up 0.22% against the dollar at 1.217, but was down 0.01% against the euro at 1.161 at the close.

In company news, Aston Martin dropped again after the carmaker said it is keeping “funding options under review” following reports Saudi Arabia’s investment arm is in talks to buy a stake in the business.

It came after Autocar reported that the business is seeking to raise new equity in order to shore up its finances and provide cash for investment. Shares were 38.2p lower at 442p at the close of play.