LONDON – European markets are poised for their worst year since 2018 as Russia’s war in Ukraine, high inflation and tightening monetary policy have hurt risky assets around the world.
The pan-European Stoxx 600 index started the last trading day of 2022 down more than 12% year-to-date, its worst performance since a 13.24% annual decline in 2018. The European blue-chip index saw 2021 set a record, rising 22.25% on the year.
In early trading on Friday, Britain’s FTSE 100 was down 0.35%, the CAC 40 was down 0.6% and Germany’s DAX was down 0.5%. The Stoxx 600 lost 0.4%.
Economies around the world started the year still trying to emerge from the Covid-19 pandemic, with ongoing lockdowns in China and other ongoing supply shortages forming what is now infamously misinterpreted by the US Federal Reserve in 2021 as a “temporary” called inflationary pressures.
Russia’s unprovoked invasion of Ukraine in February and subsequent arming of its food and energy exports in the face of sweeping sanctions from Western powers sent food and energy prices skyrocketing and added to those pressures, helping to push down inflation in many major countries Propel economies to decades high.
The cost-of-living crisis stemming from soaring energy bills for businesses and consumers eventually began to weigh on economic activity, while the Fed and other major central banks were forced to tighten monetary policy with aggressive rate hikes to curb inflation.