Europe's Sizzling Temperatures Fuel Financial Market Woes

Europe's record temperatures are putting pressure on food prices and supply chains, adding to financial market woes. The heat is particularly affecting the Rhine river, a major waterway that carries around 285 million metric tons of freight each year.

Nomura senior European economist Andrzej Szczepaniak said he was monitoring water levels at Kaub, one of the shallowest points on the Rhine, on a daily basis. The disruption risks adding to inflationary pressures, with heatwaves and droughts hitting agriculture and raising concerns about food supplies and prices.

Paul Jackson, Invesco global market strategist, said 'We are definitely going to notice food price inflation.' If energy prices rise again, the impact could create a 'double whammy' for central banks, he added. Major supermarket groups in Britain have warned of another food-price shock.