Stocks fall as oil crosses the $80 mark, putting pressure on the pound.

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Stocks fall as oil crosses the $80 mark, putting pressure on the pound.

On Tuesday, stock markets fell as traders watched a strengthening dollar, increasing oil costs, a political standstill in Germany, and concerns about US debt.

As the globe finally emerges from the pandemic crisis, Brent crude oil momentarily rose above $80 per barrel for the first time in almost three years on anticipation of soaring demand and fears about constrained supplies.

Wall Street fell, with tech stocks taking the brunt of the fallout, as Treasury Secretary Janet Yellen urged Congress to increase the debt ceiling promptly to keep the US government running.

“A combination of fears that China is cooling and rising government yields has pushed traders to dump stocks,” said David Madden, market analyst at Equiti Capital, as the Dow Jones index fell 2% and the tech-heavy Nasdaq fell 2.5 percent in mid-session.

“The possibility of increased energy prices, which would fuel inflation, as well as rising bond yields, which appear to be anticipating tighter monetary policy by central banks, has caused broad selling across global equity markets,” said Chris Beauchamp, an IG analyst.

He stated that there were “few safe havens.”

Analysts blamed rising treasury yields for the disproportionate drop in tech stocks, claiming that higher interest rates disproportionately hurt tech businesses due to their increased reliance on debt to fund expansion.

TD Ameritrade’s JJ Kinahan, chief market strategist, said, “Technology stocks came under severe selling pressure early Tuesday as investors looked at a combination of uncertainty on Capitol Hill, coupled with all but certainty that borrowing prices will increase.”

Republicans in Washington have vetoed a Democratic proposal to increase the US borrowing limit, implying that the government will run out of money by the end of the week.

The US could default on its debt commitments next month, triggering a catastrophic financial crisis, according to most experts, with Republicans stating that they will not pay for Democrats’ spending plans.

The crisis is escalating as Democrats fight to enact US President Joe Biden’s multibillion-dollar infrastructure and social spending bills, with party infighting fueling fears that the president’s agenda may be stymied.

Following weekend elections, Germany, Europe’s largest economy, was in the spotlight as it prepared for weeks, if not months, of protracted coalition negotiations.

The DAX and CAC indexes in Germany were both down roughly 2%, while London was down 0.5 percent.

Even after losing a close election to the Social Democrats, Chancellor Angela Merkel’s conservatives have insisted on forming a government.

Army tanker drivers were put on standby in the United Kingdom to transport gasoline when the country ran out. Brief News from Washington Newsday.

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