Covid, war, and the Federal Reserve pushed global stocks lower for a fourth day

LONDON (Reuters) – Global stocks fell for a fourth consecutive session on Tuesday, due to a combination of rising COVID-19 cases in China, the war in Ukraine and concerns about the Federal Reserve raising interest rates this week for the first time since then. 2018 hit confidence.

Although oil prices fell more than 5% with Brent crude back below $100 a barrel, bringing some relief to battered European stock markets and the euro currency, the market rebound indicated that sentiment was fragile.

In the middle of the day trading London, Euro Stoxx (.stoxx) It was 1.1% weaker than the French CAC 40 (.fchi) It fell 1.1%, Britain’s FTSE index (.FTSE) It was 0.8% lower. US stock futures rose 0.2%

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“The upcoming meetings of the Federal Reserve and the Bank of England will see pressures on equities as markets anticipate that central banks will continue to focus on putting pressure on rising inflationary pressures, ignoring the potential need for a looser policy on the back of deteriorating growth prospects,” Stewart said. Cole, chief macroeconomist at Equiti Capital.

European stocks have been recovering in recent sessions but remain sharply lower in 2022.

69% of respondents to a monthly survey of fund managers expect the European economy to weaken over the next year, the highest percentage since 2011, according to BoFA.

The swing of 81 percentage points from a net 12% for February still projecting growth represents the biggest month-on-month decline since 1994. Read more

In the US, another sharp drop has sent the Nasdaq 100 index down more than 20% from its record peak late last year. Wall Street futures pointed to more pain at the open.

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MSCI World Index (.MIWD00000PUS) It fell 0.2% and traded last week, its lowest level in one year.

The lack of significant progress in Ukraine-Russia talks on Monday added to tensions while fears of possible new tensions between China and the United States grew.

Washington warned Beijing against providing military or financial aid to Moscow after the Russian invasion of Ukraine. Read more. Chinese companies listed in New York fell sharply during pre-market trading on Tuesday. Read more

“The question we’re asking is whether the markets have hit peak bearishness,” said Jack Siu, chief investment officer of Credit Suisse for Greater China.

MSCI’s broadest index of Asia Pacific shares outside Japan (MIAPJ0000PUS.) It fell 2.82% led by the apparent weakness in Chinese stocks. The index is down 11% so far this month.

MSCI Asia ex-Japan ratings vs. MSCI World

Hong Kong’s Hang Seng Index (.HSI) It remained mired in negative territory on Tuesday, down 5.8% after selling around 5% the day before. Hong Kong’s main board is down 19% so far in March — the index hasn’t fallen significantly in a month since 2008.

Technology index in the city (.HSTECH) It has been hit, down 32% this month as investors worry about the next regulatory crackdown from US and Chinese authorities on the sector.

Attention moves to the box

Adding to the market jitters was the rising number of COVID-19 cases in China, which investors fear could hurt mainland economic growth in the first quarter. Read more

China on Tuesday reported 3,602 new confirmed cases of the coronavirus, compared to 1,437 cases on Monday. Read more

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Brent crude fell about 7% to $ 99.67 a barrel, while US crude fell about 8% to $ 94.98 a barrel. Crude oil prices topped $130 a barrel just last week as investors worried about supply shortages exacerbated by sanctions imposed on Russia after its invasion of Ukraine. Read more

Investors are also focused on the US Federal Reserve, which meets on Wednesday and is expected to raise interest rates for the first time in three years to offset rising inflation.

All eyes are on whether the Fed is pushing a hard line and committing to keep rising until inflation is under control.

“We are not convinced by the arguments too hawkish, but the FOMC may not be willing to consider pessimistic scenarios without clear signs of slowing economic growth,” said Steve Englander, head of global currency research for the G10 at Standard Chartered.

“We believe that delayed real wages and lower disposable income will lead to a pause after July, but we doubt that the FOMC is ready to consider this case yet.”

The yield on the benchmark 10-year Treasury bond rose to 2.169%, the highest level since mid-2019.

The two-year yield, which rose as traders expected to raise the Fed funds rate, rose to 1.894% in Asian trading, the highest level in two and a half years, before easing back to 1.833%.

The euro, which was under pressure last week on fears that the war in Ukraine will harm the regional economy, rebounded, last rising 0.5% at $1,099. The dollar index fell 0.4 percent.

Gold prices fell 1% to $130.

(Reporting by Tommy Wilkes and Sikat Chatterjee) Additional reporting by Scott Murdoch in Sydney. Editing by Susan Fenton and Raisa Kasulowski

Our criteria: Thomson Reuters Trust Principles.

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