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Stocks fall, dollar climbs amid fragile sentiment: markets wrap

Gold was at $1 873.83 an ounce, down 0.5%.
Image: Paul Yeung/Bloomberg

Stocks fell anew Monday and the dollar climbed as high inflation, monetary tightening and the prospect of an economic slowdown spurred another bout of risk aversion.

An Asia-Pacific equity gauge shed over 1.5%, US and European futures retreated and sovereign debt was under pressure — providing little respite for investors after the fifth straight weekly decline in global shares and bonds.

In China, the yuan dropped amid data showing stagnating imports and the slowest export growth in dollar terms since 2020, underlining the economic toll of Covid lockdowns. Premier Li Keqiang warned about the employment situation as Beijing and Shanghai tightened virus curbs.

Oil hovered around $110 per barrel. Crude is being buffeted by the demand hit from China’s outbreak and supply risks linked to Russia’s war in Ukraine.

Treasury yields were in sight of levels last seen in 2018, while Australian bonds extended a selloff. Inflation data this week from the US and elsewhere could drive bond-market swings.

Volatility remains the watchword in global markets on growth, inflation and war risks. Later Monday, President Vladimir Putin is due to speak at Russia’s May 9 Victory Day parade, which marks the anniversary of Nazi Germany’s surrender in 1945. He may indicate his next steps for the Ukraine invasion.

The short-term outlook for stocks “is still messy and there may be more downside as markets worry about a significant economic slowdown or ‘hard landing’ and aggressive interest-rate hikes,” Diana Mousina, senior economist at AMP Investments, wrote in a note.

Federal Reserve officials have been defending the US central bank against arguments that it’s fallen well behind in the fight against inflation.

Fed Governor Christopher Waller and St. Louis Fed Bank President James Bullard said critics don’t take enough account of the tightening of financial conditions the Fed engineered even before it began raising rates in March.

In the latest Russia-related developments, the Group of Seven most-industrialised countries pledged to ban the import of Russian oil. The European Union is working on a similar plan but Hungary remains a holdout and the bloc’s talks are set to continue.

Elsewhere, India’s rupee hit a record low against the dollar, while Bitcoin dipped toward levels last seen in 2021.

Here are key events to watch this week:

  • Russian President Vladimir Putin to speak on Victory Day in Russia. Monday
  • Philippines presidential election. Monday
  • Cleveland Fed President Loretta Mester, Atlanta Fed President Raphael Bostic speak. Tuesday
  • New York Fed President John Williams, Fed Governor Christopher Waller speak. Tuesday
  • Atlanta Fed President Raphael Bostic speaks. Wednesday
  • China PPI, CPI. Wednesday
  • US CPI. Wednesday
  • San Francisco Fed President Mary Daly speaks. Thursday

Some of the main moves in markets:

Stocks

  • S&P 500 futures fell 1.1% as of 6:37 a.m. in London. The S&P 500 fell 0.6% Friday
  • Nasdaq 100 futures slid 1.1%. The Nasdaq 100 fell 1.2% Friday
  • Japan’s Topix index lost 1.7%
  • Australia’s S&P/ASX 200 index shed 1.3%
  • South Korea’s Kospi index fell 1.4%
  • China’s Shanghai Composite Index declined 0.4%
  • Euro Stoxx 50 futures fell 1.5%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.5%
  • The euro was at $1.0505, down 0.4%
  • The Japanese yen was at 131.06 per dollar, down 0.4%
  • The offshore yuan was at 6.7598 per dollar, down 0.6%

Bonds

  • The yield on 10-year Treasuries rose two basis points to 3.14%
  • Australia’s 10-year yield rose nine basis points to 3.56%

Commodities

  • West Texas Intermediate crude rose 0.4% at $119.15 a barrel
  • Gold was at $1 873.83 an ounce, down 0.5%
© 2022 Bloomberg

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