GLOBAL MARKETS – Global markets fall as growth uncertainties linger, while safe-haven assets rise


Investors sold stocks on fear of weak growth and bought safe-haven assets such as government bonds and the Swiss franc on Thursday, unable to sustain a late gain on Wall Street. Shares of Cisco Systems Inc fell 13.7% after the company warned of continued component shortages, fueling price and growth concerns. It was the latest high-profile stock this week to see its biggest decline in nearly a decade. Data showed factory output in the US Mid-Atlantic region slowed far more than expected in May, with business prospects for the next six months the weakest in more than 13 years, a survey found. regional Federal Reserve Bank. Some megacap growth stocks that have underperformed this year have made gains, but the rally has fizzled. The Dow Jones Industrial Average fell 0.75%, the S&P 500 lost 0.58% and the Nasdaq Composite fell 0.26%.

But, “there’s probably still enough fear among investors to see a few more downdrafts,” he said. Cash hoarding hit its highest level since September 2001, indicating strong bearish sentiment, according to Louise Dudley, portfolio manager at Federated Hermes Ltd. Goldman Sachs estimates a 35% chance of a US recession over the next two years, while Morgan Stanley sees a 25% chance of one within the next 12 months. U.S. spot electricity and natural gas prices hit their highest levels in more than a year in parts of the U.S. as Americans turned on air conditioners during a spring heatwave .

Big slides for Walmart on Tuesday and Target on Wednesday have demoralized investors wondering about rising costs in the supply chain, said Michael James, managing director of equity trading at Wedbush Securities. “You have a pretty severe shock to the money manager system with the combination of these two,” James said. “This kind of damage is hard to undo, adding to the extremely difficult year that tech investors have had,” he said. But James said there are those who see the market as extremely oversold and “you’re due for some kind of a bounce”. Traders are looking for a catalyst that will turn the market around as it nears a near-term bottom, said Rick Meckler, president of hedge fund LibertyView Capital Management LLC.

The MSCI gauge of stocks across the world fell 0.65% and the pan-European STOXX 600 index lost 1.37%. The S&P 500 is down about 18% from its record close on Jan. 3, and the MSCI index has similarly fallen since its high on Jan. 4. Economic data raised fears that the Federal Reserve’s aggressive monetary tightening could hurt the global economy. The 10-year Treasury yield fell 3.8 basis points to 2.846%, after hitting a three-week low of 2.772%.

“We will have to discuss what we can do together in our respective areas of responsibility to avoid stagflation scenarios,” German Finance Minister Christian Lindner said upon arriving for a two-day meeting of top central bankers near from Bonn. Oil prices rebounded after two days of losses in a volatile session, buoyed by dollar weakness and expectations that China could ease some lockdown restrictions that could boost demand. U.S. crude futures rose $2.62 to settle at $112.21 a barrel. Brent settled $2.93 at $112.04 a barrel. U.S. gold futures rose 1.4% to $1,841.20 an ounce as a weaker dollar and Treasury yields boosted bullion’s safe-haven appeal.

The dollar fell across the board, retreating further from a two-decade high as most other major currencies lured buyers. The dollar index fell 0.896%, with the euro up 1.11% at $1.0582. The Japanese yen strengthened 0.35% to 127.79 per dollar. The Swiss franc rose after Swiss National Bank President Thomas Jordan signaled on Wednesday that the SNB was ready to act if inflationary pressures continued. Central banks are walking a tightrope, trying to regain control of decades-high inflation without causing painful recessions.

Summary of news:

  • GLOBAL MARKETS – Global markets fall as growth uncertainties linger, while safe-haven assets rise
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