The decline in global markets fueled by technology is seen in Europe and Asia

After the stock market slumped in Europe and Asia on Wall Street, technology stocks suffered a new blow as concerns about rising inflation led the central bank to tighten monetary policy.

The European Stoxx 600 index fell 1.7% in the morning trading, and the German and French markets had a similar margin. The FTSE in London fell by 2 per cent to 2 per cent. The falls occurred on Monday after a heavy drop of 2.6 percent in American Nasdaq Composite technology.

Technology stocks suffered the heaviest sell-off in Europe on Tuesday, with the Stoxx 600 technology index down 2%. All other major industry groups were also lower on the day, according to Refinitiv data.

The move came ahead of U.S. inflation data on Wednesday, with consumer prices expected to rise 3.6% in April from the same time last year, and 0.2 percent from March 2021. A “basic” index that excludes volatile foods. and energy prices are expected to rise by 0.3% compared to the previous month. Citigroup economists expect the increase in the base index to increase used car, transportation and hotel prices.

Tuesday’s data showed that Chinese plant prices, an indicator of what domestic consumers and western importers will pay for goods, rose to a 6.8 percent three-year rise in the last month, year-on-year.

Hong Kong’s Hang Seng closed down less than 2 percent and the Japanese Nikkei 225 ended the Tokyo trading session by more than 3%.

It is held by US Federal Reserve Chairman Jay Powell he committed the central bank will continue to buy $ 120 billion in monthly bonds that have driven markets through the pandemic until the path to recovery is clarified.

Investors, however, are looking forward to when the Fed may be forced to change its stance, a forecast that has been very difficult after the central bank. review the inflation regime last year allowed for short-term explosions of high price growth.

“This year will see a rapid economic recovery and, as a result, inflationary pressures, push investors to take a narrower real stance on policy,” Capital Economics analysts said in a research note.

Inflation is not only increasing the chances of central banks removing market support. It also erodes the profitability of fixed-income securities, such as government bonds, by lowering their prices and increasing profits. The performance of the US Treasury bond informs investors how they value the cash flows of future stocks. Analysts say the factor is particularly important in the case of technology stocks, which have risen rapidly during the pandemic and have had lower interest rates on their valuations.

Shares of many Wall Street flyers have begun to decline rapidly. Cathie Wood’s Ark fund, which has shares in companies like Tesla, is scarce a third since the February summit, other sparse parts of the market, such as unprofitable technology companies and groups that have suffered from bitcoin price fluctuations, have stumbled.

The U.S. benchmark 10-year yield was 1.608 percent on Tuesday, but rose about 0.9 percent at the beginning of the year.

Not all analysts are concerned about the future direction of stocks, and some have argued that higher U.S. inflation will be transient as consumer demand stabilizes and supply chain bottles associated with the industry’s shutdown last year are fixed.

“While investors have been worrying about inflation lately, we expect a short-term rise in inflation to be temporary and not to be concerned about sustained inflation,” said Andrea Bevis, UBS’s senior vice president of private wealth management.

However, he added that “investors should diversify beyond megapap technology companies and turn to market cycles and value-oriented markets”, such as energy producers and industrial groups, which “should continue to achieve greater profits and economic expansion”.