Inflation gives world stock markets a fright

By Bill Jamieson

THREE questions are begged by the turbulence that has pulled down stock markets in America, Europe and the UK in recent weeks.

First, given that oil prices have been rising for two years [and have now started to ease] why has it taken so long for markets to grasp the inflation threat to growth?

Second, if global inflation is now perceived as the main risk to markets, why is it that energy and natural resource stocks in particular have fallen so sharply? Surely they should be rising, not falling?

And third, is this a temporary adjustment to prospects of slower growth or the start of a prolonged setback to the recovery of recent years?

In continental Europe, shares racked up their third straight weekly decline, with the Frankfurt Dax down 137 points, or 2.8%, on the week. Paris lost 2.6%.

London suffered a 96-point slump on Wednesday and limped home to finish the week ...

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