Markets fret over growth and inflation, just as tech rout gains speed

Global markets are grappling with concerns over economic growth and persistently high inflation, as the tech sector experiences a sharp decline. Despite hopes of a de-escalation in the Iran conflict boosting oil prices, the situation remains volatile. Government borrowing costs have surged, while the Nasdaq, driven by technology stocks, hit its steepest one-day drop since April 2025.

European economic data has also weakened, contributing to a cautious outlook. Inflation expectations, as measured by the University of Michigan, have risen to 4.7% in October from 4.6% in September and 3.4% in February, indicating that price pressures may persist even as growth slows. Analysts warn that geopolitical tensions and supply disruptions could continue to drive inflationary pressures beyond the US midterms.

Food prices, particularly in Britain and the US, are a major concern, with the UN Food and Agriculture Organization's Food Price Index hitting a four-year high. Tighter financial conditions, evidenced by a rise in borrowing costs and a selloff in risk assets, further complicate the growth outlook. Despite these challenges, economic growth in the euro zone and the US remains resilient, with low unemployment rates and strong AI infrastructure investment in the US.