GLOBAL MARKETS—Stocks are falling as persistent US inflation raises concerns about interest rates and the economy

GLOBAL MARKETS—Stocks are falling as persistent US inflation raises concerns about interest rates and the economy

“I think we probably were delusional six months ago with the rise of U.S. equities on hopes and prayers and the madness of the meme stocks, and suddenly we’re going a little bit back to what is reality,” he said. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 2% to a 22-month low. Japan’s Nikkei fell 1.7%. Treasuries were steady in Asia, but selling at the short end and a rally at the longer end has flattened the yield curve as investors brace for near-term hikes to hurt long-run growth. The benchmark 10-year Treasury yield fell six basis points (bps) overnight and dropped a further 2.6 bps in Tokyo trade to 2.8967%. The gap between two-year and 10-year yields narrowed by 3.5 bps.

On Thursday, Asian markets sank to nearly two-year lows, while the dollar climbed to multi-year highs, as data revealed persistently high U.S. inflation, raising investor concerns about the economic toll of aggressive interest rate hikes to temper it. Following the announcement, US markets swung back and forth before closing significantly lower. In the Asia session, S&P 500 futures gave up early gains and fell 0.2 percent. European futures also sank, with the EuroSTOXX 50 futures falling 2% and the FTSE futures down 1.6 percent. Bitcoin plummeted 7% to $26,970, leading a fire-sale of risky assets as rate rises gain traction. It was near $40,000 a week ago and is now 60% lower than its six-month high. The growth-sensitive Australian and New Zealand dollars plummeted over 1% to near two-year lows. Headline U.S. consumer prices rose 8.3% for the 12 months to April, slower than the 8.5% pace of a month earlier, but higher than market forecasts for 8.1%. Traders said it underscored concern that rates will rise quickly in response. “We’re now very much embedded with at least two further (U.S.) hikes of 50 basis points on the agenda. For equity markets that is the end of free money,” said Damian Rooney, director of institutional sales at Argonaut in Perth.

“There should be a tipping point in how far the Fed can be pressed before odds point towards a hard landing,” said NatWest Markets’ U.S. rates strategist Jan Nevruzi. SELL IN MAY The rates outlook is driving up the U.S. dollar and taking the heaviest toll on riskier assets that shot up through two years of stimulus and low-rate lending. The Nasdaq is down nearly 8% in May so far and more than 25% this year. Hong Kong’s Hang Seng Tech index slid 1.5% on Thursday and is off more than 30% this year. Cryptocurrency markets are also melting down, with the collapse of the so-called stablecoin TerraUSD highlighting the turmoil as well as the selling in bitcoin and next-biggest-crypto, ether. A weakening growth picture outside the United States is battering investor confidence, too, as the war in Ukraine threatens an energy crisis in Europe, and lengthening COVID-19 lockdowns in China throws another spanner into supply chain chaos.

Nomura estimated this week that 41 Chinese cities are in full or partial lockdowns, making up 30% of the country’s GDP. Property developer, Sunac China said it missed a bond interest payment and will miss more as China’s real estate sector remains in the grip of a credit crunch. The yuan fell to a 19-month low of 6.7631 and has dropped almost 6% in under a month. The Australian dollar fell 0.8% to a near two-year low of $0.6879. The kiwi slid by a similar margin to $0.6240, though the euro and yen held steady to keep the dollar index just shy of a two-decade peak. Sterling was at a two-year low of $1.2204. In commodity trade, oil wound back a bit of Wednesday’s surge as growth worries dampened fear of gas supply disruptions in Europe. Brent crude futures fell 1.3% to $106.90 a barrel. British activity and growth data are due later in the day.

Disclaimer: If you need to edit or update this news from compsmag then kindly contact us Learn more

For Latest News Follow us on Google News


Latest Headlines
  • Show all
  • Trending News
  • Popular By week
To minimize government spending, UK Prime Minister Boris Johnson is focusing on public service
To minimize government spending, UK Prime Minister Boris Johnson is focusing on public service
The Institute for Government, a think tank, estimated the savings to the public finances could be around 3.6 billion pounds ($4.38 billion) a year. In the ...
US travel companies flex marketing power to appeal to travelers seeking sun and sand
US travel companies flex marketing power to appeal to travelers seeking sun and sand
About six in 10 Americans have made plans to do at least one summer trip this year, according to monthly data from non-profit firm U.S. Travel Association ...
Maruti Suzuki selects a site in Haryana for a new production facility, with an initial investment of Rs 11,000 crore
Maruti Suzuki selects a site in Haryana for a new production facility, with an initial investment of Rs 11,000 crore
”There will be further investments as we go along,” Bhargava noted, without sharing any financial details. He said the facility would help the company cater ...
PMI Electro plans to build a commercial electric vehicle factory in Maharashtra
PMI Electro plans to build a commercial electric vehicle factory in Maharashtra
With the upcoming facility in Pune, the total annual manufacturing capacity of PMI will grow to 4,000 electric CVs, the company said, adding that the new ...
Shanghai declares victory over COVID, lifting Chinese stocks
Shanghai declares victory over COVID, lifting Chinese stocks
For the week, the CSI300 index gained 2%, its biggest jump in six weeks, since Shanghai entered a city-wide lockdown. The Shanghai Composite Index climbed ...
More technical support needed for the paper sector: Minister of Culture Meghwal
More technical support needed for the paper sector: Minister of Culture Meghwal
Union Minister of State for Culture Arjun Ram Meghwal advocated on Thursday for additional technological support for the paper industry, praising its ...
Shanghai tries to limit COVID jump in May, so Chinese stocks are rallying
Shanghai tries to limit COVID jump in May, so Chinese stocks are rallying
** Shanghai officials also said on Friday they will start to steadily ease traffic restrictions and open shops this month, while Beijing on Thursday denied ...
CHART-Take Five: Is talk of a recession justified?  follow the numbers
CHART-Take Five: Is talk of a recession justified? follow the numbers
Friday’s existing-home sales data could show just how quickly rising mortgage rates are cooling the housing market. The Fed’s determination to contain ...
TMC believes that the prime minister should resign if he cannot guarantee the country's economic recovery
TMC believes that the prime minister should resign if he cannot guarantee the country’s economic recovery
The BJP was quick to hit back, accusing the TMC of pushing West Bengal into a ”debt trap”. Talking to reporters, Ray said, ”The country has never witnessed ...
Bandhan Bank Q4AF22 income increases 43% to Rs 3,504.2 cr;  profit at Rs 1,902.3 cr
Bandhan Bank Q4AF22 income increases 43% to Rs 3,504.2 cr; profit at Rs 1,902.3 cr
On asset quality, there was a slight improvement with the gross non-performing assets (NPAs) falling to 6.46 per cent of the gross advances as of March 31, ...
Show next
We will be happy to hear your thoughts

Leave a reply

Compsmag - Latest News In Tech and Business
Logo