Broker examines financial information on computer screens of the IG Index on the trading floor in London, UK, February 6, 2018. REUTERS / Simon Dawson
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- Shares are falling with growing fears of a global recession
- Beijing is at risk of blocking
- The relief of Macron’s election victory is short-lived for the euro
- Oil returns to $ 100 a barrel
- Graph: Global asset efficiency
LONDON, April 25 (Reuters) – Traders gave up riskier assets on Monday as relief over Emmanuel Macron’s victory in France’s presidential election quickly gave way to renewed concerns about the global economy and its impact on rising interest rates. .
Asian markets suffered their worst session in more than a month overnight, as worries that Beijing may soon return to blockade pushed Chinese stocks back to the bottom by 2020 and the effects of the Wall Street downturn by 2.5 % on Friday continued. .
The strike immediately continued in Europe. The STOXX 600 index (.STOXX) fell to its lowest level since mid-March, driven by a 2% and 1.9% decline in French (.FCHI) and German (.GDAXI) shares. The euro fell 0.7% to its lowest level since the initial panic attack of COVID-19 in March 2020.
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“The reality is that there is more to the French election than Macron’s victory yesterday,” said Rabobank FX strategist Jane Foley.
France is not only facing parliamentary elections in June, but Macron also seems likely to continue to push for a ban on Russian oil and gas imports across Europe, which would cause severe economic pain, at least in the short term.
“Last week, German officials said that if there was an immediate embargo on Russian energy, it would cause a recession in Germany. And if there is a recession in Germany, it will drag the rest of Europe down and have an effect on the rest of the world, “Foley said.
MSCI’s broadest global stock index fell 0.7% to a six-week low. Oil fell more than 4 percent in commodity markets, and worries about Beijing led the Chinese yuan to a one-year low.
China’s state television said 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 Chinese-sensitive Australian dollar fell 1.2 percent, while the US dollar rose steadily to a two-year high, reaching $ 1.0707 against the euro and 1.2750 against the British pound.
There is a strong emphasis on how quickly and far the Federal Reserve will raise US interest rates this year and whether this, along with all other global concerns, will drive the world economy into recession.
This week is also loaded with corporate profits. Almost 180 index companies from the S&P 500 have to report. Big technology in the US will be the highlight, with Microsoft and Google on Tuesday, Facebook on Wednesday and Apple and Amazon on Thursday.
In Europe, 134 of the Stoxx 600 will also report, including HSBC, UBS and Santander on Tuesday, Credit Suisse on Wednesday, Barclays on Thursday and NatWest and Spanish BBVA on Friday.
“I wonder if just meeting expectations will be enough, I just have a feeling we might need a little more,” said Rob Carnell, ING’s chief economist in Asia, amid concerns about big technology after a horrific Netflix report last week. .
“These are guidelines for the future that will be as important as anything, and I suspect that most of these companies will come out and say that everything looks pretty uncertain, which I don’t think will really help.”
World stocks are suffering from one of the worst in a year
FACTOR OF FEAR
US markets fell on Friday when the Dow Jones (.DJI) had its worst day since October 2020, and the CBOE’s volatility index (.VIX), called the “measure of fear” on Wall Street, jumped higher.
“Concerns about interest rates and the recession are now the biggest risks for investors,” with a special focus on demand, said Candice Browning, head of global research at Bank of America.
“Rising food and gasoline prices plus the end of key stimulus programs are making investors worried about the ability of low-income consumers to spend.
Monday’s sell-off in Asia also saw Hong Kong’s Hang Seng (.HSI) fall 3.7 percent and Shanghai Composite (.SSEC) down nearly 5 percent.
The Central Bank of China has fixed the yuan’s trading point at its lowest level in eight months, seen as an official sign of the recent depreciation of the currency, and the yuan was sold further to a one-year low of 6.5092 per dollar.
The metals were also confused. Dalian iron ore fell more than 9%. Copper, the driver of economic growth, fell 1.6 percent and crude Brent futures fell 4.5 percent to a two-week low of $ 101.78 a barrel.
Meanwhile, palm oil jumped 6% and the Indonesian rupiah fell after a ban on exports from Indonesia, which further intensified global pressure on food prices.
The higher dollar pushed spot gold 0.8% lower to $ 1,913 an ounce. Bitcoin was just under $ 40,000.
At least the bond markets have stabilized. The 10-year reference yield was 2.8738%, while Germany’s 10-year yield, the benchmark for Europe, fell 9 basis points to 0.87%. France’s 10-year yield also fell about 9 basis points to 1.34%.
This week will also release data on US growth, data on European inflation and a political meeting of the Bank of Japan, which will be monitored for any hints in response to a sharp fall in the yen, which lost 10% in about two months.
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Additional reports by Tom Westbrook Mark Jones; edited by John Stone Street
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