Stocks plunged Tuesday morning due to record inflation, supply chain restrictions and rising energy prices. These factors are all weighing on economic growth.
At a time when central banks are raising interest rates to reduce inflation, the shadow cast by the war in Ukraine and the impact it has on energy supplies is affecting the economic outlook. In June, the Federal Reserve raised rates by 0.75% -- the largest increase since 1994 -- in the midst of the nation's worst bout with inflation for 40 years. However, some economists fear that the rate increases could lead to a recession.
On the hope of easing trade tensions between Beijing, Washington, Asian benchmarks were generally higher. The COVID-19 lockdowns in Chinese cities earlier this year have had a negative impact on China's recovery from the pandemic. They also put pressure on global supplies.
China's Commerce Ministry announced Tuesday that Vice Premier Liu He had spoken with Treasury Secretary Janet Yellen to discuss coordinating economic policies between the two largest economies and maintaining stability in supply chains.
It also stated that the Chinese side expressed concern about issues such as the lifting of additional tariffs and US sanctions imposed on China, and fair treatment for Chinese companies. It said that the two sides had agreed to continue their talks.
A resurgence of COVID-19 infections is also on the horizon, raising concerns about a return to pandemic preparedness.
At least some Americans may receive updated COVID-19 shots in the fall. Government advisers voted June that it was time to adjust booster doses to better match new virus variants.
The benchmark U.S. crude oil lost 49 cents to $107.94 per barrel in energy trading. It rose $2.67 to $108.43 per barrel on Friday. Monday trading was closed. Brent crude oil, an international standard, dropped $1.84 to $111.66 per barrel.