Shares, oil fall as concerns about recession outweigh relief for French votes

A broker looks at financial information on computer screens on the IG Index trading floor in London, UK 6 February 2018. REUTERS / Simon Dawson

Sign up now for FREE unlimited access to

  • Shares fall as fears of a global recession increase
  • Beijing in danger of closure
  • Macron elects winner short-term relief for euro
  • Oil falls back to $ 100 a barrel
  • Graphics: Global asset performance

LONDON, April 25 (Reuters) – Traders dropped more risky assets on Monday as the relief over Emmanuel Macron’s victory in the French presidential election quickly gave rise to renewed concern about the impact of rising interest rates on global economic growth.

Asian markets suffered their worst session in over a month, as concerns that Beijing could soon be locked in sent Chinese stocks back to the 2020 lows, as the effects of Wall Street’s 2.5% decline on Friday persisted. .

Bashing continued in Europe. The STOXX 600 index (.STOXX) fell to its lowest level since mid-March, weighing 2% and 1.9% in French (.FCHI) and German (.GDAXI) stocks, respectively. The euro fell 0.75% to its lowest level since the first COVID-19 panic in March 2020.

Sign up now for FREE unlimited access to

“The reality is that there is more behind 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 seems to be keeping up the pressure for a European ban on Russian oil and gas imports, which will cause serious 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 lead to a recession in Germany. And if there was a recession in Germany, it would drag the rest of Europe down and have a consequence. “for the rest of the world,” said Foley.

Results of the French presidential election Results of the French presidential election, vote in the second round

MSCI’s broadest world stock index (.MIWD00000PUS) fell 0.8% to a low of six weeks. Oil fell above 4% and concerns for Beijing led the Chinese yuan to fall to a one-year low.

Chinese state television reported that residents were ordered not to leave Beijing’s Chaoyang district on Monday after several dozen COVID cases were discovered over the weekend. read more

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.

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 packed for corporate earnings. Nearly 180 S&P 500 index companies need to report. Great American technology will be the highlight, with Microsoft and Google both on Tuesday, Facebook on Wednesday and Apple and Amazon on Thursday.

In Europe, 134 of the Stoxx 600 will also post results, including banks HSBC, UBS and Santander on Tuesday, Credit Suisse on Wednesday, Barclays on Thursday and NatWest and Spain’s BBVA on Friday.

“I wonder if it will be enough to just meet expectations, it just feels like we might need a little more,” said Rob Carnell, ING’s chief economist in Asia, referring to concerns about big technology after a serious report from Netflix last week.

“There is guidance on the future that will be as important as anything else, and I suspect most of these companies are going to come out and say it all looks pretty uncertain, something I don’t think is going to help.”

World equities suffering from one of the worst ever begin in a year


US futures pointed to several falls after the Dow Jones (.DJI) on Friday suffered its worst day since October 2020, and the volatility index that the CBOE (.VIX), called the Wall Street “fear meter”, continues to rise.

“Price and recession concerns are now the biggest risk for investors,” with a particular focus on demand, said Candace Browning, head of global research at Bank of America.

“Spike 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’s Hang Seng (.HSI) fall 3.7% and the Shanghai Composite Index (.SSEC) fall above 5%.

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 latest crash, 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%. Copper, a watch for economic growth, fell 2.2% and Brent oil futures fell 4.5% to a two-week low of $ 101.78 a barrel.

Palm oil whipped and the Indonesian rupiah raged after a ban on exports from Indonesia which further increased worldwide food price pressure.

The higher dollar pushed spot gold 0.8% lower to $ 1,913 per ounce. Cryptocurrency Bitcoin fell to a 6-week low of $ 38,202.

The bond markets received at least some relief. The 10-year reference rate was back at 2.8217%, while Germany’s 10-year yield, the benchmark index for Europe, fell as far as 0.87%. France’s 10-year interest rate was also down around 9 basis points to 1.34%.

The 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 will be one of the largest annual increases ever.

This week, US growth data, European inflation figures and a political meeting of the Bank of Japan will also be released, which will be monitored for hints of a response to a sharp fall in the yen, which has lost 10% in about two months.

The only way is up!
Sign up now for FREE unlimited access to

Additional reporting by Tom Westbrook in Singapore; editing by John Stonestreet and Bernadette Baum

Our standards: Thomson Reuters Trust Principles.

Source link

Back to top button

mahjong slot