Global stocks, government bonds and oil prices fell on Monday as investors worried about the effect of rising interest rates and inflation in Europe and the United States, and coronavirus shutdowns in China.
Wall Street’s benchmark, the S&P 500, fell 1.2%, led by technology and energy stocks. The tech-heavy Nasdaq Composite lost 2.2%.
Hawkish comments from Federal Reserve officials helped push the S&P 500 to its first weekly decline for a month last week, and Mike Zigmont, head of trading and research at Harvest Volatility Management, said the developments had “ruined the mood” of even the most optimistic. investors.
“Add to the fact that yields are higher again across the curve and you have a bearish environment,” he added. “Yields just go up, up, up and the gawking optimists can’t ignore it any longer.”
The US declines followed losses across most of Asia and Europe earlier in the day. The Europe-wide Stoxx 600 index lost 0.6%, with Britain’s FTSE 100 falling 0.7% after data showed the UK economy barely expanded in February.
In Asia, the Hang Seng China Enterprises index of mainland Chinese stocks fell 3.8% and China’s benchmark CSI 300 index of stocks listed in Shanghai and Shenzhen lost 3.1% as the impact of Lockdowns imposed in Shanghai to limit the spread of Covid have begun to weigh on economic activity.
Markets fell further on Tuesday, with Hong Kong’s Hang Seng index down 0.5%, Japan’s benchmark Topix index down 1.3% and South Korea’s Kospi down 1. .1%.
In government debt markets, the yield on the 10-year US Treasury note, which underpins global borrowing costs, rose 0.08 percentage points to a new three-year high of 2. 78%. Yields rise when prices fall.
The yield on the German 10-year Bund jumped 0.11 percentage points to 0.81%, its highest level since mid-2015.
French markets provided a rare ray of hope after the first round of presidential elections this weekend. Incumbent President Emmanuel Macron is expected to defeat far-right rival Marine Le Pen in the final round of voting in two weeks, although polls suggest a tighter race than in 2017.
Paris’ CAC 40 stock index ended the day up 0.1% as the spread between French and German bond yields – a measure of the perceived risk of holding French debt – narrowed .
The euro initially rallied against the dollar before falling back to a 0.1% gain for the day. “Overall, this is largely a result in line with expectations that will remove tensions in the foreign exchange market and provide some relief to the euro,” said Stephen Gallo, chief strategy officer. European forex at BMO.
Oil prices fell more than 4%, with Brent crude settling below $100 a barrel for the first time in nearly a month. West Texas Intermediate, the US oil marker, fell below $95 a barrel.
Plans to release record volumes of oil from strategic reserves and coronavirus shutdowns in China have pushed the oil market to give up most of the gains that followed Russia’s invasion of Ukraine in late February. A period of extremely volatile trading since the invasion has seen the number of active Brent futures – also known as open interest – drop sharply.
“Continued Covid lockdowns in China, along with coordinated stock releases in the US and IEA, are fueling the capitulation of oil markets,” said Bart Melek, head of commodities strategy at Securities Securities. TD. “These forces have combined to ease the immediate short-term pressures on self-sanctioned Russian barrels.”
Additional reporting by Hudson Lockett in Hong Kong