Portugal Colonial - Recession fears send stocks, oil prices plunging

Wall Street opened lower while European stock markets were down in afternoon trading and Asia closed in the red, a day after healthy gains.

Federal Reserve boss Jerome Powell's two-day testimony to Congress this week will be pored over for an idea about officials' plans for fighting runaway prices, which are being fanned by supply chain snarls, China's Covid lockdowns and the war in Ukraine.

Powell warned lawmakers on Wednesday that US economy faces an "uncertain" global environment and could face further inflation "surprises".

He once again stressed that the Fed is committed to bringing down inflation -- which has reached a 40-year high -- with higher interest rates, but said the world's largest economy "is very strong and well positioned to handle tighter monetary policy."

Most observers expect the Fed to aggressively hike US interest rates several more times this year having recently carried out the sharpest lift in almost 30 years.

"The 'R' word is likely to come up a lot today and the Chairman will have a tough time dodging it, especially with mid-terms in five months," said OANDA market analyst Craig Erlam, referring to recession.

"Naturally, he'll do his best to remain apolitical but I'm not sure investors will be able to ignore so much recession chat," he added.

Expectations of more rate hikes are handing support to the dollar, which pushed the yen briefly to a fresh 24-year low Wednesday.

The Bank of Japan is holding back from lifting interest rates, in sharp contrast to other major central banks.

"Swiftly rising interest rates act as a vacuum for economic growth, and this isn't lost on the market today," noted Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.

"This is a darker day for global markets than has been seen in a while. Serious questions remain about the resilience of consumers, and it appears traders are bracing for a harsh hand where interest rates are concerned."

Oil prices were feeling the heat from recessionary fears, with both main contracts tanking more than six percent at one point.

Crude and gas prices have soared in recent months after major economies lifted pandemic lockdowns and following the invasion of Ukraine by major energy producer Russia.

Surging energy costs are fuelling global inflation, with official data Wednesday showing the British annual rate hitting a fresh 40-year high above nine percent.

In the United States, President Joe Biden will Wednesday ask Congress to suspend the federal gas tax for three months as skyrocketing prices cause widespread anger among Americans just months before crucial mid-term elections.

A senior administration official noted that US gas prices -- averaging near $5 per gallon -- had jumped almost $2 since Russian President Vladimir Putin began building up forces on the Ukrainian border earlier this year.

- Key figures at around 1330 GMT -

Brent North Sea crude: DOWN 6.0 percent at $107.83 per barrel

West Texas Intermediate: DOWN 6.5 percent at $102.36 per barrel

London - FTSE 100: DOWN 1.5 percent at 7,048.37 points

Frankfurt - DAX: DOWN 1.9 percent at 13,045.98

Paris - CAC 40: DOWN 1.6 percent at 5,867.49

EURO STOXX 50: DOWN 1.7 percent at 3,435.66

New York - Dow: DOWN 1.2 percent at 30,175.91

Tokyo - Nikkei 225: DOWN 0.4 at 26,149.55 (close)

Hong Kong - Hang Seng Index: DOWN 2.6 percent at 21,008.34 (close)

Shanghai - Composite: DOWN 1.2 percent at 3,267.20 (close)

Euro/dollar: UP at $1.0539 from $1.0535 late Tuesday

Pound/dollar: DOWN at $1.2257 from $1.2273

Euro/pound: UP at 85.99 pence from 85.80 pence

Dollar/yen: DOWN at 135.99 yen from 136.64 yen

burs-rl/lth

F.Moura--PC