© Reuters. FIE PHOTO: A man wearing a protective mask is seen inside the Shanghai Stock Exchange building in the Pudong Financial District of Shanghai, China on February 28, 2020. REUTERS / Aly Song
By Marc Jones
LONDON (Reuters) – Traders dropped more risky assets on Monday as relief over Emmanuel Macron’s victory in the French presidential election quickly gave rise to renewed concerns about the impact of rising interest rates on global economic growth.
Asian markets suffered their worst session in more than a month as concerns that Beijing could soon be back in the lockdown sent Chinese equities back to 2020 levels, as the effects of the Wall Street fall of 2.5% on Friday lasted by. [.N].
Bashing continued in Europe. The STOXX 600 index fell to its lowest level since mid-March, weighing 2% and 1.9% in French and German equities, respectively. The euro fell 0.75% to its lowest level since the first COVID-19 panic in March 2020.
“The reality is that there is more to French election history than Macron’s victory yesterday,” said Rabobank’s currency strategist Jane Foley.
Not only are there still parliamentary elections in France in June, but Macron also looks set to keep up the pressure for a European ban on Russian oil and gas imports, which would cause severe economic pain, at least in the short term.
“We had German officials who said last week that if there was an immediate embargo on Russian energy, it would cause a recession in Germany. And if there was a recession in Germany, it would drag the rest of Europe down. and have contagious effects. for the rest of the world, “Foley said.
MSCI’s broadest world stock index fell 0.8% to a six-week low. Oil fell by more than 4%, and concerns for Beijing then fell to a one-year low. [.SS]
Chinese state television reported that residents were ordered not to leave Beijing’s Chaoyang district on Monday after a few dozen COVID cases were discovered over the weekend.
The China-sensitive Australian dollar fell as much as 1.2%, while the US dollar climbed unhindered to a two-year high, hitting $ 1.0707 against the euro and 1.2750 against the British pound. [FRX/]
Much focus is on how quickly and far the Federal Reserve will raise US interest rates this year and whether it will help tip the world economy into recession.
This week is also filled with corporate earnings. Nearly 180 companies must report. Major US technologies will be the highlight, with Microsoft (NASDAQ 🙂 and Google (NASDAQ 🙂 both on Tuesday, Facebook (NASDAQ 🙂 on Wednesday and Apple (NASDAQ 🙂 and Amazon (NASDAQ 🙂 on Thursday. [.N]
In Europe, 134 of them will also publish results, including the banks HSBC, UBS and Santander (BME 🙂 on Tuesday, Swiss credit (Sex 🙂 Wednesday, Barclays (LON 🙂 Thursday and NatWest and Spain’s BBVA (BME 🙂 Friday. ()
“I wonder if it will be enough to live up to expectations, it just feels like we might need a little more,” said Rob Carnell, ING’s chief economist in Asia, referring to nervousness about big tech after a terrible report from Netflix (NASDAQ:) last week.
“It’s guidance about the future that will be just as important as anything else, and I suppose most of these companies will come out and say it all looks pretty uncertain, which I don’t think will really help.”
US futures pointed to more falls after the Dow Jones on Friday experienced its worst day since October 2020, and as the CBOE volatility index, called Wall Street’s “fear gauge”, continues to run higher. [.N]
“Price and recession concerns are now the biggest risks for investors,” with a particular focus on demand, said Candace Browning, head of global analysis at Bank of America (NYSE :).
“Rising food and gasoline prices plus the end of key stimulus programs have investors worried about the low-income consumer’s ability to spend.”
Monday’s sales in Asia also saw Hong Kong fall 3.7% and Shanghai’s composite index fell above 5%. [.SS]
China’s central bank had set the midpoint of the yuan’s trading band at its lowest level in eight months, seen as an official nod to the currency’s recent fall, and the yuan was resold at a one – year low of $ 6.5092 per dollar.
Metals were also destroyed. Dalian iron ore fell more than 9%. , a time for economic growth, fell 2.2% and futures fell 4.5% to a two-week low of $ 101.78 per share. barrel. [O/R][MET/L]
Palm oil was whipped and the Indonesian rupiah slipped after a ban on exports from Indonesia that further increased global food price pressures.
The higher dollar pushed 0.8% down to $ 1,913 per share. ounce. Cryptocurrency fell to a 6-week low of $ 38.202.
The bond markets received at least some relief. The benchmark 10-year interest rate was back at 2.8217%, while Germany’s 10-year interest rate, the benchmark for Europe, fell as far as 0.87%. France’s 10-year interest rate also fell around 9 basis points to 1.34%. [GVD/EUR][US/]
Money markets are now pricing a 1 percentage point increase in US interest rates at the next two meetings of the Federal Reserve and at least 2.5 points for the year as a whole, which would be one of the largest annual increases ever seen.
This week, US growth data, European inflation figures and a political meeting of the Bank of Japan will also be published, which will be monitored for any hints of a reaction to a sharp fall in the yen, which has lost 10% in about two months.